That trajectory, the sound balance sheet and the company’s history of double-digit operating margins and returns on capital all merit support. That just leaves us with the knotty issue of valuation. A forecast price-to-earnings ratio of 30 can hardly be described as a bargain, even for a firm as solid and well run as this one, hence the need for patience. Hold.

Questor says: hold

Ticker: NICL

Share price at close: £13.40

Update: Fuller, Smith & Turner

The comparisons with two years ago are still not great, as we suspected at the time of last month’s analysis of Fuller, Smith & Turner, but the pubs-to-hotels group’s first-half results last week still showed a return to profit, positive cash flow and the dividend list.

That is more than enough to keep us interested, especially as the business looks very cheap on an asset-value basis, both relative to peers such as Young’s and City Pub Company and in absolute terms.

Its £408m market value compares with shareholders’ funds, or net assets, of £441m at the end of the first half, so the shares are trading below book value, which should grow as profits recover. In addition, the company has not revalued the bulk of its pubs since 1999, so that £441m figure is likely to be conservative.

The comparison with two years ago is not particularly fair either, as the first six months of the fiscal year to March 2022 featured two weeks of the last lockdown. More pertinently, momentum seems to be building. During the six months to the end of September, sales were down by a fifth against 2019 across the directly managed hotel and pub estate. 

But in the first seven weeks thereafter, to Nov 13, the drop was just 10pc, to reinforce the potential for a strong recovery in the business, especially if footfall and tourism improve in central London and commuters return to the office (and by implication transport hubs’ pubs on their way home).

Net debt has come rattling down thanks to good management of working capital, April’s £52m issue of new shares and asset sales, and that further boosts confidence in the investment case, even if some of the working capital inflow may reverse in the second half. Keep buying.

Questor says: buy

Ticker: FSTA

Share price at close: 660p

Russ Mould is investment director at AJ Bell, the stockbroker

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