Stockopedia comments Paul Scott - BOWL3 Jun 2024 10:59
Paul’s opinion - seeing the figures in full has renewed my confidence in BOWL. It’s such a good business, and will continue growing organically with each new site it opens.
I think the valuation stacks up on existing forecasts, looking probably about right. However, I suspect there could be good, highly operationally geared upside to the forecasts as consumer disposable incomes are now rising well above inflation. The GfK consumer confidence numbers are also strikingly better than a year ago, as I mentioned in my podcast over the weekend.
Therefore, whilst BOWL looks priced about right, I suspect there could be (can’t be certain of course), a decent probability that BOWL might start to out-perform the existing forecasts as 2024 progresses. If that’s what happens, then progress for this share could be driven by ahead of expectations updates maybe. With an 83% gross margin, the profit numbers could really fly - eg a 10% increase in LFL revenues would add £9.9m extra gross profit. Even if it had to increase centre staff by 10%, that would still be a £7.9m increase in gross profit, which would drop through to roughly a 25% increase in PBT (profit before tax). Those are only my rough numbers of course.
Put all this together, and the potential for a private equity takeover offer, and I’m moving back up again to BUY.
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