Mitchells & Butlers: Robust Trading, Strengthening Balance Sheet, and Undemanding Valuation Support Buy Rating

Analyst James Wheatcroft from Jefferies maintained a Buy rating on Mitchells & Butlers and keeping the price target at p355.00.

James Wheatcroft has given his Buy rating due to a combination of factors that highlight both operational strength and valuation appeal. He notes that Mitchells & Butlers delivered another solid festive trading performance, with like-for-like sales growth remaining strong despite facing demanding comparatives from the prior year. The company has continued to build momentum through the first quarter, indicating resilient customer demand even against last year’s weather-related disruptions. At the same time, management is focused on offsetting substantial upcoming cost pressures, and the lack of any change to guidance suggests confidence in achieving current market expectations.
Wheatcroft also emphasizes that Mitchells & Butlers is increasing its market share and is structurally well positioned, benefiting from its scale, predominantly freehold estate, and broad offering across formats and customer segments. He highlights robust cash generation that is expected to support a meaningful shift in value from debt holders to equity holders over the next several years. In his view, the shares trade on a forward EV/EBITDA multiple that is below their historical range, leaving room for re-rating as the balance sheet strengthens. Concerns about a potential negative impact on consumer spending following the UK Budget have not yet materialized, reinforcing his positive stance on the stock.

Based on the recent corporate insider activity of 17 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of MAB in relation to earlier this year.