FTSE 100 hospitality firm Whitbread (LSE: WTB) saw its share price fall to a 52-week low of 2,723p on 5 August.
It’s back up a bit as I write, to 2,810p. But that’s still a 23% fall year to date, about the same as its five-year drop.
The reasons behind the fall seem clear enough. A pandemic followed by soaring inflation can make hotels, restaurants, and leisure facilities a lot less attractive to people with less cash in their pockets.
Cheap shares?
I’m not the only one who thinks the shares look cheap now, though. The company, which owns Premier Inn, does too. It’s been on a share buyback spree for much of the year.
The latest update in June showed little change in the UK, but sales in Germany were back to growth. And CEO Dominic Paul even spoke of growing the firm’s UK room count by 3,500.
Analysts expect earnings before tax to grow by more than 40% between 2024 and 2027. And that could send the price-to-earnings (P/E) ratio down under 11 by then.
Uncertain outlook
With the uncertainties around the leisure business, that might make the stock look fully-valued at the moment. Net debt, of £298m at the last year-end, could do with coming down too.
And I could see some volatility ahead, as it can be hard to get investor sentiment back behind a stock like this.
But with the Whitbread share price so depressed now, I think it should be one to consider for long-term value investors.
Back to growth
My next pick, Spirax-Sarco Engineering (LSE: SPX), has hit its 52-week low on the very day I’m writing, 20 August. At 7,340p, that’s a 30% fall so far in 2024.
The name doesn’t exactly trip off the tongue. But the company is big in pumps, industrial control systems, and a range of similar equipment.
And since the pandemic, we’ve seen what was once a growth stock favourite come off the rails a bit.
This is another where forecasts show earnings returning to growth. In this case, analysts have earnings before tax rising 40% between 2023 and 2026.
High valuation?
I do think the Spirax-Sarco valuation has been too high in the past, and its growth premium was perhaps a bit overheated.
And right now, I’d still say it’s by no means screaming cheap. Not with a P/E that, though falling, could still be up around 23 on 2026 forecasts.
So it’s not on my shortlist to buy right now. But it is one I want to keep a longer-term eye on. And I think there might be some nice buying opportunities in the not-too-distant future.
Other lows
It surprises me to see Reckitt Benckiser not far up from the 52-week low it set in July. At the time of writing, it’s down 22% on the year so far, and 31% over five years.
We’re looking at forecast P/Es of 12-14 in the next few years, close to the long-term FTSE 100 average.
For a company in such a vital consumer brands market, I think this is worth a deeper dive. But that’ll be for another day.
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Alan Oscroft has no position in any of the shares mentioned. The Motley Fool UK has recommended Reckitt Benckiser Group Plc and Rolls-Royce Plc. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.
