Upper Crust owner and food outlet operator SSP Group (SSPG) is benefitting from more people travelling by air. Shares in the company fly 6.3% higher to 532p.
Group sales from 1 July to 30 September 2017 are anticipated to rise 14.8%, while like-for-like sales growth is expected to hit 3%.
In the Travel Food Services division, revenue growth of 3.3% has driven the strong performance and is expected to beat full year expectations.
IS THE PREMIUM RATING JUSTIFIED?
Canaccord Genuity’s Nigel Parson reiterates his ‘sell’ recommendation despite the robust trading and better margins from the consolidation of an Indian joint venture.
SSP currently trades on 20.6 times forecast earnings per share of 25.8p in the year to 30 September 2018.
The analyst believes SSP is now too expensive, noting this resulted in profit taking in early September.
In contrast Liberum’s Anna Barnfather thinks SSP’s premium rating is justified as the company is ideally placed to benefit from structural growth trends, which provides scope for future earning upgrades.
Barnfather has hiked earnings before interest forecasts by 4.5% in 2017 and 2.5% for 2018 due to better than anticipated sales and margin growth progression,
New contracts at Chicago Midway Airport have also contributed to SSP’s strong trading, with net contract gains over the fourth quarter increasing 8.5%.
