MIDAS SHARE TIPS UPDATE: City toasts Marston's move to push beer brands and pubs upmarket

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Top up: Marston's focuses on creating high-end pubs and buying speciality brands, such as Bomber

This weekend, millions of people up and down the country will be enjoying an Easter pint or two at their local pub. 

Many will be owned by Marston’s, which runs 1,700 pubs and brews distinctive beer such as Banks’s, Brakspear, Jennings and Ringwood, as well as Marston’s itself.

Last week, Marston’s added two more well-known ales to its stable, Wainwright and Lancaster Bomber, as part of a £25 million deal to buy the beer division of North-West brewer and pub chain Daniel Thwaites.

The transaction is part of Marston’s masterplan – to focus on local and premium brands and to create a distinct and desirable pub estate.

The strategy has won favour in the City. Midas recommended the company in January 2010 when the shares were 88p. Today they are 156p and most analysts believe they have further to go.

Over the past five years, chief executive Ralph Findlay has been selling down-at-heel boozers, revitalising the remaining estate and building modern, attractive pub-restaurants, which appeal to families and women.

The group, which includes chains such as Pitcher & Piano bars and Revere pubs, is building about 25 pub-restaurants a year, aiming to cash in on the increasingly popular casual dining market, where meals are reasonably priced and service is informal and friendly.

Transforming a portfolio of almost 2,000 outlets is not an easy job and profits fell last year and the year before, as Findlay disposed of unwanted pubs.

However, in the retained estate profit per pub rose by 10 per cent last year and the group’s dividend was increased by 5 per cent to 6.7p.

Analysts expect profits to climb 11 per cent to £92 million in the year to this September, while the dividend is forecast to rise to 7p with further gains pencilled in for 2016.

Midas verdict: Brokers approve of Marston’s overhaul and Findlay’s focus on family-friendly, foodie pubs sits well with current trends.

Investors who bought in 2010 have seen good capital growth and benefited from a generous dividend. They should continue to hold. New investors could also pitch in at 156p. The group should deliver long-term growth and the dividend yield is attractive.

Traded on: Main Market ticker: MARS Contact: marstons.co.uk or 01902 711 811