ii view: Mitchells & Butlers shares rally hard
Operating an array of high street brand names such as All Bar One and Nicholsons and on a net asset value of 476p per share. Buy, sell, or hold?
28th November 2025 11:34
by Keith Bowman from interactive investor
Full-year results to 27 September
- Revenue up 3.9% to £2.71 billion
- Adjusted operating profit up 5.8% to £330 million
- Continues to not pay a dividend
- Net debt including lease liabilities down 11% to £1.28 billion
Chief executive Phil Urban said:
"We are pleased to report another year of strong performance. Like-for-like sales continued to outperform the market across all segments, reinforcing the strength of our strategy and market positioning.
“Our market-leading estate and diversified guest propositions provide a strong foundation for resilience and growth, enabling us to capture incremental market share and deliver continued long-term outperformance"
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ii round-up:
Mitchells & Butlers (LSE:MAB) today detailed an acceleration in sales growth, with the pub group flagging a potential return to shareholder returns given an ongoing fall in group net debt.
Like-for-like sales for the first eight weeks of the new 2026 financial year, which started at the end of September, rose 3.8% year-over-year, up from growth of 3.2% for the final quarter of the 2025 fiscal year. A 5.8% rise in adjusted annual operating profit for 2025 to £330 million, helped lower total net debt including lease liabilities by 11% to £1.28 billion.
Shares in the FTSE 250 company soared 10% in UK trading having come into these latest results up 5% so far in 2025. That’s just below a 7% gain for the FTSE 250 index year-to-date. Budget focused rival Wetherspoon (J D) (LSE:JDW) is up by around 15% this year.
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Mitchells operates over 1,700 pubs and restaurants including brands such as O'Neill's, Miller & Carter, Toby Carvery, and even Innkeeper hotels.
A net debt-to-adjusted profits (EBITDA) ratio of 2.7 times leaves management still focused on reducing debt, although with the position being monitored and shareholder returns and investment opportunities considered.
Group costs during the full year rose in line with management’s forecast for £100 million, driven higher by increased labour costs. Mitchells continues to forecast an increase in costs for 2026 of £130 million, or just under 6% of the current cost base.
A net asset value per share of 476p is up from 433p per share in 2024. A first-quarter trading update is likely mid-January.
ii view:
Formed from the coming together of two Midlands-based families in 1898, the Birmingham headquartered company today employs around 50,000 people. Food generated most sales in this latest fiscal year at 54%, with drink at 43%, and services such as rents from unlicensed properties, a small balance of 3%. As well as other UK brands such as Harvester and Ember Inns, the group also operates the ‘Alex’ chain of bars in Germany, generating 4% of overall sales.
For investors, consumer headwinds including higher UK government tax take, could potentially reduce customer demand. Higher labour costs are being battled with historically volatile food and energy costs. The impact of unseasonal weather always warrants consideration, while the halted dividend payment contrasts with forecast yields of over 1.5% for rivals Wetherspoons and Fuller Smith & Turner Class A (LSE:FSTA).
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To the upside, 19 different brands across the mid-to-upper market segments offer diverse consumer exposure. A fall in group net debt and a previous refinancing of unsecured debt facilities is now seeing consideration for shareholder returns. Ongoing management initiatives include the installation of solar panels and sensors to reduce costs, while the estimated net asset value per share continues to sit comfortably above the current share price.
On balance, and despite ongoing risks, a consensus analyst estimate of fair value above 345p per share appears to suggest greater confidence in a recovery and longer-term optimism in City circles.
Positives:
- Diversity of brands
- Ongoing management efficiency programme
Negatives:
- Uncertain economic outlook
- Potential currency headwinds from Germany business
The average rating of stock market analysts:
Buy
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