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The Restaurant Group

January 2019

Investing in shares may lose you all or some of your money. Past performance is no indication of future performance. Some of the shares recommended here may be small company shares, which can be relatively illiquid and hard to trade and this makes such shares more risky than other investments.

  • Epic Code:
  • RTN
  • Price:
  • 141p
The acquisition of Wagamama and rights issue were narrowly voted through (by c.60%-40% with 80% of shareholders participating) at the EGM on 28th November. Rather like Brexit, this deal has split opinion with bulls citing Wagamama’s strong growth record and the potential to replicate it in places like airports, while bears cite the cut in dividend (6.6p forecast for ’19), share dilution and high levels of debt to fund it. Time will tell but we will give management the benefit of the doubt.Canaccord notes the deal will be dilutive in year 1, neutral in 2 and eps enhancing in the third year with rights adjusted eps forecasts for 14.7p, 13.2p and 16.4p in FY’18-’20 before a jump to 19.8p in ’21. Its new t ...

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