Amid a sea of red in the wider market film studio Pinewood (PWS:AIM) is up 1.8% to 463p on a bumper set of full year results supported by it hosting a trio of massive blockbusters: Star Wars: Episode VII — The Force Awakens, Avengers: Age of Ultron and the 24th Bond film Spectre.
This offers a positive backdrop to an imminent meeting between the company and Crystal Amber – the activist investor which bought a 4% stake as part of Pinewood’s £30 million placing in April. Crystal Amber says Pinewood is not as profitable as its peers.
Today’s numbers - covering the 12 months to 31 March - go some way to making the current management’s case. Revenues hit record levels and earnings per share (EPS) are up 17% year-on-year to 13.5p – 5.5% ahead of house broker N+1 Singer’s estimate – with a confident outlook underpinned by a 40% hike in the full year dividend to 3.5p.
The broker is forecasting EPS and free cash flow to double in the next four years as the company benefits from the significant barriers to entry, strong demand for studio space and the substantial asset base. This star quality comes at a price. At current levels and based on consensus estimates the shares trade on 38 times March 2016 EPS.