Applegreen will likely continue its rapid pace of buying up forecourts in Ireland, the UK and the US as it posted a 24% rise in earnings that was helped by better margins despite rising fuel prices.
Revenues in 2017 rose 21% to over €1.42bn and adjusted earnings before interest, tax, depreciation and amortisation climbed to €39.8m boosted “by strong fuel margin in the both the Republic of Ireland and the UK in the early part of the year, positive performance of recent acquisitions and good like-for-like growth in food and store”, the company said.
Applegreen shares fell almost 1% at one stage in the latest session, valuing the firm at €510.9m. The shares are still up 23% from a low in the last 52 weeks of €4.50.
After buying 11 sites in the opening months of this year, it now operates from 353 sites. At the end of last year, it operated from 342 sites, after buying 99 sites, of which 22 were in the Republic and 57 in the US.
“We have a strong pipeline of further developments of both service area sites and petrol filling stations across our markets,” it said.
In the Republic, sales of food and stores revenues on a like-for-like basis rose 4.6%, while gross profit climbed 7.8%. Davy said it would likely revise its 2018 earnings target to about €48m as the company goes into 2018 “in excellent shape”. The broker has kept its price of €7.20.
“Our positive investment thesis is predicated on the view that Applegreen has the ambition, opportunity set, and balance sheet to materially scale the business over the medium term,” Davy said.
Investec Ireland said: “We expect the group to continue to add circa 50 stores a year in Ireland, UK, and the US.”