Irn-bru maker AG Barr (BAG) gained 6.6% to 499p as it upgraded its full-year expectations as it enjoyed ongoing ‘strong’ performance in ‘on the go’ and hospitality sectors.
‘[We] now anticipate both revenue and profit before tax for the full year to be ahead of current market expectations,’ the company said.
For the year, revenue was expected to be around £264 million and pre-tax profit around £41 million.
‘The fast moving situation in relation to the Covid-19 pandemic remains a risk however we expect our revenue momentum to continue into 2022 and we plan to provide a further trading update in early February 2022,’ the company said.
Liberum analyst Wayne Brown commented: ‘Another upgrade two months before year-end suggests high degree of confidence and more to come is now highly likely. AG Barr is an annual compounder where performance is highly sustainable and dependable.
‘HIGH LEVELS OF PREDICTABLE REVENUE STREAMS’
‘In an inflationary environment, investors should look to buy into annual compounders with high levels of predictable revenue streams, and with the ability to utilise multiple levers to offset inflationary pressures, e.g., pricing power, a flexible promotional mix and pack mix, and sales through multiple distribution channel, which de-risks the business.’
His counterpart at Shore Capital Darren Shirley was similarly positive. He said: ‘With an exciting portfolio of brands underpinning attractive margins (15.7% EBIT for FY22), sustained cash generation (free cash flow yield two-year average of 7.3%) and with a balance sheet that provides considerable optionality (net cash of £74 million) there is much to like in the AG Barr investment case.’
