Financial Trading Blog

Stock of the day 28/07/2017 – Merlin Entertainments PLC



Can Legoland help Merlin Entertainments build to a fresh peak when the company announces its full year figures on Thursday?

Despite the shadow of the Smiler-accident at Alton Towers in 2015, and the uncertainty caused by Brexit, 2016 can be classed as a fairly solid year for Merlin Entertainments, even if it did only add around 5p in value per share. Now, that may sound like pittance, but considering the day of the referendum result the company plunged to an intraday low of £2.98 – the only it has fallen below £3 in its history – it’s not bad going.


(Source: IT-Finance.com, 28/02/2017)

And things have only gotten better in 2017, with a strong start to the New Year has seen the tourism giant grow by nearly 14%, crossing the £5 mark for the first time to hit a record high of £5.07 just last week. Merlin Entertainments PLC now sits at a current trading price of £4.94 (IT-Finance.com, 28/02/2017).

Merlin’s market performance is made all the more impressive is the gloomy tone struck in its most recent updates. In September Merlin stated that ‘wider security concerns’ had affected city centre attractions, where like-for-like growth slipped by 0.4%, and that it was ‘yet to see any material benefit’ from sterling’s slump. This outlook was echoed in November, though it did confirm profit growth was in line with expectations.

In terms of Thursday’s annual results, then, Merlin is forecast to see a 9.2% rise in pre-tax profit to £273 million, a vast improvement on the 0.3% growth managed in its fiscal 2015. Investors will also to know whether the supressed interest in city centre attractions has continued, alongside an update on the global expansion of the company’s important Legoland brand.

Merlin Entertainments PLC has a consensus rating of ‘Buy’ with an average target price of £5.01.

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