Stockopedia comments Paul Scott - BOWL21 Oct 2024 09:39
Paul’s opinion - the lack of LfL (like for like) revenue growth does concern me a little. That said, ending the year with a slight beat is pleasing. Going forward, I don’t see particular scope for this share to re-rate any higher in terms of PER as the market seems comfortable to price it around 14-15x PER, which is where we currently sit. Is there scope to beat forecast? Maybe, but looking at historical performance, 2020 and 2021 were obviously hit hard by the pandemic, but demand then bounced back strongly in 2022 and 2023. It seems to me that BOWL probably enjoyed peak trading in 2022 and 2023, and might now be struggling to maintain that growth - with new & refurbished sites possibly taking up the slack from it not being possible to deliver any further growth from existing sites in the shorter term?
The good news is that household incomes are now rising again, well above inflation. This should mean that plenty of working households will be enjoying more disposable income again. As an affordable leisure activity, I think bowling could benefit from that macro effect.
We don’t know what the future holds, all we can work on is the figures available today. These show a reasonably priced share, in a company with prodigious cashflows, which it utilises to self-fund further expansion, and pay decent divis. That’s such a good combination, that I have to stay positive.
There’s also the possibility of a buyout offer - BOWL is the only remaining listed bowling operator, with a smaller competitor having been bought out - private equity like to buy these companies, grow them further, then sell them back to the city for a higher price a few years later. I imagine an offer of 400-450p would be likely to succeed, as institutions like liquidity events that enable them to cash out for a premium.
https://app.stockopedia.com/content/small-cap-value-report-mon-21-oct-2024-placeholder-1011645?order=createdAt&sort=desc&mode=threaded
Sign In
Follow the stocks
