A fantastic set of full-year results have taken shares in Young's & Co (YNGA) ever nearer to their 874p all-time high in 2007. Today's news pushed up the stock by 2.8% to 840p and cemented Young's position as one of the leading pub operators on the London market.


The business has reported a 13.1% rise in adjusted pre-tax profit to £21.4 million, ahead of market expectations. The dividend's gone up by 5%, representing 16 consecutive years of dividend growth. And the new financial year has got off to a great start with a 10.6% rise in like-for-like sales over the first seven weeks.




Young's is unashamedly a premium-end business. Its prices are not cheap, neither are its pubs scruffy. But there's a growing market for this quality experience which is driving its profits in the right direction.


The business derives 30% of its sales from food. Chief executive officer Stephen Goodyear says he doesn't want to exceed this level 'so as to not become a restaurant'. He says the group sells burgers to oysters and has managed to 'get better and smarter' at the offering. He adds: 'We seem to have managed margins on liquor and food, both up around half a percentage point.'


The group invested £21 million in 2012 on its pubs estate which included a few site purchases. Around £11 million is spent every year on maintaining the existing estate. Goodyear wouldn't say how many pubs Young's planned to buy in 2013, merely saying: 'We can afford to be choosy'.


The rise in micro breweries across the UK is not deemed to be a major threat to Young's and its own-branded beers. The CEO welcomes consumer interest in these niche products, saying it encourages them to visit pubs. He also states that Young's own branded beer sales remain 'resilient'.


YOUNG & COBREW'A' - Comparison Line Chart (Rebased to first)


Shares highlighted Young's potential just over a year ago (see Griller, 19 Apr, pages 44-45 - to download a free pdf of this magazine click here) at 655p. The stock has subsequently enjoyed a strong run. There could be further to go, judging by analyst price targets. Panmure Gordon reckons Young's will enjoy faster earnings growth than its quoted peer Fuller's (FSTA) and has today raised its price target from 804p to 955p.

Issue Date: 23 May 2013