Marston’s PLC (GB:MARS) stock surged 7.5% as of writing after the UK-based company reported higher revenues and profit in its preliminary results for FY24. The company reported a statutory pretax profit of £14.4 million in FY24, marking a turnaround from a loss of £30.6 million a year ago. Meanwhile, revenue increased 3% to £898.6 million, with like-for-like sales rising 4.8%, driven by growth in food and drink sales.
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Marston’s is a brewing company that primarily offers beers, ciders, wines, and spirits alongside food and gaming services in its pubs and restaurants.
Marston’s Reports Strong Numbers in FY24
In FY24, Marston’s reported robust results, demonstrating significant growth across key metrics. The company’s underlying pretax profit grew 64.5% year-over-year to £42.1 million from £25.6 million. Moreover, its underlying EBITDA (earnings before interest, tax, depreciation, and amortization) margin rose to 21.4% from 19.5% in 2023.
Another highlight from the results was the progress in reducing debt. The company’s net debt, excluding IFRS 16 lease liabilities, decreased significantly by £301.7 million to £883.7 million in FY24.
This was mainly driven by the sale of the 40% stake in Carlsberg Marston’s Brewing Company (CMBC), a subsidiary of Carlsberg Group (DE:CBGA). This was a key milestone for the company, enabling it to focus on its pub business and improve financial flexibility.
Marston’s Sees Strong Trading Momentum Ahead
In FY25, like-for-like sales grew by 3.9% in the first six weeks, marking a strong start to the year. Additionally, Christmas bookings are outperforming last year, with many venues achieving high reservation levels.
In the near-to-medium term, Marston’s expects revenue growth to surpass market expectations. It also expects an EBITDA margin expansion of 200 to 300 basis points and over £50 million in recurring free cash flow.
Are Marston’s Shares a Good Buy?
Analyst James Wheatcroft from Jefferies praised the company’s results but expressed concerns about its net debt of £883.7 million. He believes that this limits its ability to pay dividends or invest in new projects. Wheatcroft maintained a Hold rating on the stock with a downside risk of 16.3%.
On TipRanks, MARS stock has been assigned a Moderate Buy rating based on two Buys and one Hold recommendation. The Marston’s share price target is 36p, which is 16.28% below the current trading level.
