Peak Hours News – Investing tips, Stock, Economy News
  • Investing
  • Stock
  • Economy
  • Editor’s Pick
Economy

Why has the JD Wetherspoon share price jumped?

by October 7, 2022
written by October 7, 2022

There has not been much reason to raise a glass lately for shareholders in JD Wetherspoon (LSE: JDW) such as myself. Pubs have faced a difficult trading environment. The JD Wetherspoon share price has halved in the past year.

However, as I write this, the shares are up 12% in this morning’s trading. Does this suggest they might be turning the corner – and could now be the time to increase my stake?

Results give glimmers of hope

The jump follows the release this morning of the pub landlord’s preliminary results. But at first blush, it might be hard to see why these would cause the share price to rise.

The company opened the results by comparing the figures to its pre-pandemic 2019 prelims. Compared to then and before exceptional items, like-for-like sales fell. So did revenue. So did operating profit. So did free cash flow. The company made a loss in the first six months of the year and there will be no dividend paid, compared to a 12p per share payout back in 2019.

So why have the shares risen? I think it is because the battered JD Wetherspoon share price already had so many dismal expectations priced in that the results themselves were a reminder of the business potential. After all, the company made an operating profit and generated free cash flow. After exceptional items, it also recorded a profit.

I think the operating profit and free cash flow are a welcome sign that the business is rebuilding. It has faced and continues to experience considerable challenges, from energy inflation to staff availability. The fact it has turned an operating profit provides a foundation for improved results in future, I hope.

Strong prospects

In fact, it is those prospects that give me pause to consider whether now might be the time to increase my holding of Spoons shares. If I had spare to money to invest, I would buy more shares for my portfolio even after today’s jump in the JD Wetherspoon share price.

I think the underlying business model is strong and proven. The company has built a loyal customer base that I think gives it a competitive advantage against rival pub chains like Mitchells & Butlers.

Clearly, as the results show, the pub trade is experiencing a perfect storm of challenges. Unfortunately, I expect that to mean that some pubs will fold. Spoons itself has earmarked several dozen of its own pubs for sale. But by focusing on the company’s core strengths and maintaining its historical focus on costs, I think JD Wetherspoon could end up in a stronger position than it entered the pandemic.

Can the share price recover?

Although I would be happy to buy more Spoons shares today, I expect its business recovery to take years and there may be bumps along the road. That could dog the short-term JD Wetherspoon share price.

As a long-term investor though, that does not bother me. I hope the business model, competitive advantage and proven ability as an efficient operator will see it recover in coming years.

I see the current share price as a bargain for my portfolio. If I had spare cash to invest, I would put in another order at my stockbroker — and at the bar!

The post Why has the JD Wetherspoon share price jumped? appeared first on The Motley Fool UK.

5 stocks for trying to build wealth after 50

Markets around the world are reeling from the current situation in Ukraine… and with so many great companies trading at what look to be ‘discount-bin“ prices, now could be the time for savvy investors to snap up some potential bargains.

But whether you’re a newbie investor or a seasoned pro, deciding which stocks to add to your shopping list can be a daunting prospect during such unprecedented times.

Fortunately, The Motley Fool UK analyst team have short-listed five companies that they believe STILL boast significant long-term growth prospects despite the global upheaval…

We’re sharing the names in a special FREE investing report that you can download today. We believe these stocks could be a great fit for any well-diversified portfolio with the goal of building wealth in your 50’s.

Claim your free copy now

setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#FFFFFF”, ‘color’, ‘#FFFFFF’);
})()

More reading

If I’d invested £5,000 in JD Wetherspoon shares five years ago, here’s how much I’d have now

These 3 FTSE shares slumped as the stock market slides. Time to buy?

Invest in what you know: the case for J D Wetherspoon shares

C Ruane has positions in JD Wetherspoon. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

0 comment
0
FacebookTwitterPinterestEmail

previous post
3 reasons I think Tesco shares are too dangerous to buy
next post
How I’d invest £20,000 in a Stocks and Shares ISA to earn extra income for life

You may also like

Dividends set to return at IAG? Here’s the...

October 1, 2023

Will Rolls-Royce shares be the best FTSE 100...

October 1, 2023

Are Scottish Mortgage shares a bargain at 670p?

October 1, 2023

Will the stock market crash again this month?

October 1, 2023

Is the Lloyds share price a bargain or...

October 1, 2023

Should investors buy this FTSE 100 stock after...

October 1, 2023

Which of these FTSE 100 dividend shares should...

October 1, 2023

No savings at 45? I’d buy these 2...

October 1, 2023

4 of the best FTSE 100 stocks to...

October 1, 2023

Should investors buy this FTSE 250 stock that’s...

October 1, 2023
Enter Your Information Below To Receive Free Trading Ideas, Latest News, And Articles.


Your information is secure and your privacy is protected. By opting in you agree to receive emails from us. Remember that you can opt-out any time, we hate spam too!

Recent Posts

  • Dividends set to return at IAG? Here’s the dividend forecast through to 2025!

    October 1, 2023
  • Will Rolls-Royce shares be the best FTSE 100 investment in 2023?

    October 1, 2023
  • Are Scottish Mortgage shares a bargain at 670p?

    October 1, 2023
  • Will the stock market crash again this month?

    October 1, 2023
  • Is the Lloyds share price a bargain or a value trap?

    October 1, 2023

Categories

  • Economy (16,602)
  • Editor's Pick (1,140)
  • Investing (371)
  • Stock (3,858)
About Us Terms & Conditions Privacy Policy Email WhiteListing Contact Us

Disclaimer: Peakhoursnews.com, its managers, its employees, and assigns (collectively “The Company”) do not make any guarantee or warranty about what is advertised above. Information provided by this website is for research purposes only and should not be considered as personalized financial advice. The Company is not affiliated with, nor does it receive compensation from, any specific security. The Company is not registered or licensed by any governing body in any jurisdiction to give investing advice or provide investment recommendation. Any investments recommended here should be taken into consideration only after consulting with your investment advisor and after reviewing the prospectus or financial statements of the company.

Copyright © 2023 PeakHoursNews.com. All Rights Reserved.


Back To Top
Peak Hours News – Investing tips, Stock, Economy News
  • Investing
  • Stock
  • Economy
  • Editor’s Pick