Cafes-to-luxury cakes seller Patisserie (CAKE:AIM) has bucked the downturn in the casual dining sector by reporting a 15.7% rise in half year pre-tax profit to £9.7m.

The performance is so strong that stockbroker FinnCap has upgraded its earnings forecasts for the AIM-quoted stock for the next two years.

Analyst Roger Tejwani has marked up earnings per share forecasts by 2% in 2017 to 16.2p and by the same amount in 2018 to 18.7p.

In 2019, earnings per share is predicted to hit 20.6p, marking a huge jump from the 13.6p achieved in the year to September 2016.

The analyst believes the company can deliver a 20% rise in its dividend to 3.6p in 2017 and a further 16.7% increase in 2018 to 4.2p. In 2019, he anticipates the dividend could reach 4.6p.

Executive chairman Luke Johnson says the company has delivered growth in revenue and profit, as well as ‘excellent’ cash conversion despite challenging market conditions and the current inflationary environment.

Investors clearly like the news as its shares rise 5.9% to 338.85p.

Trading in the six weeks since 1 April has been good, according to Johnson. That period has included the launch of a trial with Sainsbury’s (SBRY) where Patisserie has set up branded counters inside the supermarket to sell products under its Patisserie Valerie brand.

‘We see this as an important footfall driver for Sainsburys’ otherwise uninspiring bakery offering, which should help to underpin commercial terms for Patisserie Valerie,’ says Tejwani at FinnCap.

The analyst is also positive about Patisserie’s ability to fund future acquisitions thanks to its strong balance sheet, cash reserves and lack of debt.

Patisserie Holdings  graph

Issue Date: 17 May 2017