Hotel Chocolat shares worth even more than this

They're hardly cheap, but shares in this fast-growing chocolatier could go higher still.

At a time when many retailers are finding trading tough, Hotel Chocolat Group (LSE:HOTC) continues to make light work of justifying its punchy stock market valuation.

The chain, which listed on AIM in 2016, produced more strong figures today as an acceleration in second half trading powered a 14% jump in full-year revenues to £132 million.

About five percentage points of this improvement came from the opening of 16 new locations in the year, including two new sites in the United States. This combination of strong UK growth, overseas potential and an impressive pace of innovation has excited investors, with the stock now up by around 40% in the year to date.

While this means shares are not cheap at more than 30 times forecast earnings, house broker Liberum continues to believe that the shares have the potential to breach 400p for the first time. The stock rose 3% to 364p in the wake of today's update, which highlighted across the board growth for Hotel Chocolat's operations in stores, online and wholesale.

Liberum said:

"This is a very impressive performance and sets Hotel Chocolat in stark contrast to the broader retail sector. Management's strategy to broaden the group's routes to market, invest in innovation and more latterly customer loyalty are combining to deliver outperformance."

The VIP Me loyalty scheme has now grown to 800,000 active members since its launch eight months ago. Other factors helping the performance include sales of the in-home Hot Chocolat maker, Velvetiser, while the brand's profile was boosted by the Channel 5 show "Chocolate Dreams" airing in January.

Source: TradingView Past performance is not a guide to future performance

New products have also done well, including those aimed at filling the gap when chocolate sales slow in the summer. In particular, its vegan chocolate-dipped lollies have been generating high levels of attention on social media.

Chief executive Angus Thirlwell, who co-founded the business in 1993 and launched the current brand name in 2003, said:

"Our pace of innovation is relentless. In our drinks and ices range we are seeing the most prolific new product Instagramming in our history."

At a recent capital markets day, Thirlwell highlighted the group's potential in UK marketplaces worth £20 billion for gifting, £6 billion for chocolate and £8 billion for cafe sales.

As well as testing America's appetite for the Hotel Chocolat brand, the group has entered into a joint venture in Japan where two Tokyo locations have been opened. Liberum said the opportunities in the United States and Japan were huge, given that the respective gifting markets are up to five times greater than the UK.

The broker noted that consensus earnings per share forecasts were currently at near-term highs, but that the company's forward price/earnings (PE) multiple had failed to keep up. Liberum added:

"The core business is in robust health and if the last three years is a proxy for the next three, Hotel Chocolat looks under-valued."