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Investing.com -- Mitchells & Butlers (LON:MAB) shares rose on Friday after the company said full-year profit is expected to come in at the top end of market forecasts, following stronger trading in its third quarter.
The UK-based pub operator reported like-for-like sales growth of 5% for the quarter, slightly above the 4.7% increase posted in the second quarter.
The company cited favorable weather and the timing of Easter as key factors. Food sales rose 4.9% and drink sales were up 4.8%.
Year-to-date, like-for-like sales increased 4.5%, with total sales up 4.4%, matching the FY25 FactSet consensus.
The company completed 150 site conversions and remodels so far this fiscal year, added two new locations, and acquired the freehold of two sites already in operation.
Mitchells & Butlers said it expects earnings for the full year to reach the upper end of current market consensus, despite ongoing wage-related cost pressures.
According to FactSet data cited in the report, analysts expect EBIT of £322 million and profit before tax of £230 million, with the upper end of forecasts at £325 million and £239 million respectively. This reflects a potential upside of approximately 1% for EBIT and 4% for PBT.
“With leverage now at 1.9x net debt / EBITDA for a predominantly freehold estate, we expect strong cash generation to drive a significant debt-to-equity value transfer over the next three years (c25%; c40% over five years),” said analysts at Jefferies in a note.
Jefferies analysts maintained a “buy” rating, citing the company’s scale, largely freehold portfolio and product diversity as advantages in a cost-inflated environment.