Young & Cos Brewery (LSE: YNGA) has been recording steady growth in recent years, with earnings per share soaring from 42.8p in 2014 to 58.4p just two years later.
And results to April 2017 have shown more of the same, with adjusted EPS up a further 13.7% to 66.43p. That came from a 9.4% rise in revenue leading to a 13.5% jump in adjusted pre-tax profit, and enabled the company to lift its dividend by 6% to 18.5p per share. On ashare price of 1,344p, thats a yield of only 1.4%, but its nicely progressive and is outstripping inflation.
Chief executivePatrick Dardis spoke of our consistent strategy of running high quality, differentiated, individual and well invested pubs and told us that the companys plan is to grow our estate through carefully selected acquisitions and developments.
Analysts are forecasting a couple more modest periodsthis year and next, most likely due to the UKs toughening economic outlook, but Im seeing a good value company here and I wouldnt be at all surprised if those predictions are upgraded over the course of the year.
Were looking at a forward P/E of around 20, which might seem a bit on the high side. But the company, which runs theYoungs, Geronimo and Ram Pub Company chains,reported net assets per share of 1,010p. Stripping that out from the share price, it values the business itself at only around 334p per share.
There might be other pub companies out there with more attractive-looking headline P/E valuations, but with Young & Cos asset situation and its relatively low debt of63.5m, Im liking the look of what I see.
Unlike Young & Co, waste management firmRenewi (LSE: RWI) has suffered a few years of falling earnings, but this year is expected to mark a turnaround with more than 40% EPS growth pencilled-in for eachof the years to March 2018 and 2019.
The period toMarch 2017 was described by chief executive Peter Dilnot as a transformational year with the successful completion of the merger with Van Gansewinkel Groep and the rebranding of the new combined group as Renewi the firm having previously been known as Shanks Group.
With such large-scale restructuring and with a rights issue, this years fundamentals perhaps dont really tell us a lot. A 27% rise in revenue is pleasing, butunderlying EPS dropped by 12% (including the effect of the rights issue). The dividend dropped a little to 3.05p per share, for a yield of 3.2%, which is middling.
Year-end debt stood at424m, which was a bit better than expected, but with a net debt-to-EBITDA ratio of 2.8 times, Id want to see that coming down significantly in the next few years.
Return to growth
Its all about what the future will bring, and the company reckons thats going to be sustainable growth, enhanced margins and attractive returns.
If forecasts turn out accurate, well be seeing a P/E multiple dropping to 14 by 2019, after two years of very attractive PEG ratings of 0.5 and 0.4 respectively. At the same time, the dividend is expected to grow to a yield of 3.6% in two years time.
The coming year is going to be a crucial one, but if the firm pulls offthe integration of its legacy business with its acquisition, I see it as the start of a successful growth path.
More profitable growth
There aregrowth candidates of all shapes and sizes out there, and the tempting pick uncovered in ourTop Growth Share From The Motley Fool report has been raking in the cashfor years.
The pastfive years have brought indouble-digit annual earnings growth, and the City’s experts are predicting two more years of solid growth ahead of us. On top of that,a progressive dividend policy adds an extra attraction to the mix.
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