Up 130% over the last year.
Anyone else watching this one.

Buy Enterprise Inns at 828.5p
Says Robert Sutherland-Smith of UK350.com
We first tipped this stock at 788p on UK350.com, it now trades at 828 - 829p.

If the sale of the Scottish & Newcastle retail pub business (or 'estate' to use the rather aristocratic description which was coined in the days when big brewers liked to be known as the 'beerage') was good for Scottish and Newcastle shareholders -recommended largely for that reason last August when the share price was 405p - then it was equally good for the shareholders of Enterprise Inns, whose managers bought the 431 Scottish & Newcastle pubs in July 2001. Enterprise has made a great success of that acquisition, together with others, making Enterprise Inns a growth stock. It is an example of specialisation and focus. Scottish & Newcastle, was then a cash strapped brewer that managed what, by then, had become a too demanding 'estate' of pubs. Enterprise Inns is a pure pub retailer; the entire specialised focus of its bottom line achievements and prospects. It seems to me that it is also represents the difference between a large company management approach to pub retailing and that of a smaller growing enterprise, like that of the eponymous Enterprise Inns. Its my understanding of this company and its operations that its commercial 'secret' lies in having a successful strategy, operating philosophy and of course business systems.

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The strategy has been to grow its UK pub retailing business by acquisitions of pubs at a time when pub chains - sorry 'estates' - were available for sale. It started with 439 pubs bought from Morgan Grenfell in 2001, followed by the Scottish & Newcastle acquisition a month or two latter and further acquisitions since then. It now has a total of 8,700 tenanted and leased UK pubs. Its philosophy seems to have been to encourage the landlord of each pub to take an enterprising approach to his or her pub and its customers, allowing them within limits, to determine what each unique customer group wants and ensuring its supply. There is a crucial trade off between the economics of scale, supply efficiencies and what economic text books recognise as 'consumer sovereignty'. More emphasis on the idea that the customer is always right and less of the 'top down' command approach to things.

The achievement of the Enterprise Inn management has been to get the balance right and turn it into a successful business model. In the year to September 2003 sales revenue was 480 million pounds. Earnings per share were 34.4p per share and dividends 8.27p per share. The following year, to 30 September 2004, sales revenue was 712 million pounds, earnings per share 45.26p and dividends per share 10.94p. This year's forecast estimates are for sales revenue of 930 million pounds, earnings of 60p and dividends of 15p. One doesn't need to be a qualified statistician to see that this represents handsome compound growth. Moreover, growth is estimated to continue next year and the year after that; as far out as analysts estimates currently go. Basically, an analyst who knows the company well is estimating earnings of 65.6p for next year rising to 71.2p the twelve months to 30 September 2007. By then, the dividend payout to shareholders will have risen to an estimated 27p a share. In summary, a dividend of 8.27p in 2002/2003 rising to an estimated 27p four years latter.

Recent results have reflected the benefits of the most recent acquisition. The UNIQUE estate deal completed in March 2004 brought an extra 4,000 pubs. It made its first contribution in the result to September 2004. In the first half results of the current year published last May, operating profit rose 69% to pounds 253.3 million pounds, profits before tax increased 53% to 143.6 million pounds, adjusted earnings per share jumped by an almost identical amount to 29.6p and the payout to shareholders was increased 56% to 5.6p a share. So the forecast for this year are well underwritten by first half accomplishments.

So what will continue to drive profit and earnings growth at Enterprise Inns over the next year or so out to September 2007? Even if we assume no other major acquisitions in the next year or so (though of course there may be) then earnings and dividends per share are forecast to continue increasing as a result of organic growth, propelled by past investment in the business, reduced interest payments as the company reduces gearing and improves borrowing terms, and rationalises the business weeding out under performing units - an ongoing management task. I also estimate that operating margins, which were 55% last year will reach 57% this year and stay at that level during the next two years. Free cash which 219 million pounds last financial year is estimated to be 310 million pounds for the current year rising to 328 million pounds next year and pounds 355 million pounds the following year to 30 September 2007.

In terms of valuation, on the basis of such forward estimates, the shares at 828.5p are selling on an earnings to price multiple of 13.6 for the current year to this September falling then to 12.6 and then to an estimated 11.6 times for the year to 30 September 2007. Similarly, the shares are on a prospective dividend yield of 1.8% for this year rising to 3.2% next year and 3.43% the year after that. Given the quality of the strategy and excellence of its execution, the strong historic and estimated prospective earnings and dividend growth, these shares look good value indicating that this share price should continue its upward trend. As confirmation of that, the shares sell at a multiple of 8.8 times this years estimated free cash flow of 310 million pounds falling to a multiple of 7.9 times the 355 million pounds free cash estimated to flow in during 2006/2007. Buy.

0833 GMT [Dow Jones] Deutsche Bank increases Enterprise Inns (ETI.LN) target to 270p from 185p. Says following recent actions by the UK government surrounding quantitative easing, an increasing number of refinancings and comments regarding improved prospects for refinancing by the company, the brokerage is lowering the refinancing risk discount to its DCF value model to 25% from 50%. Thinks Enterprise will be able to renegotiate its short-term bank debt and sees negative news flow ebbing, leading to an improving outlook for the group. Keeps at buy.

From UK-Analyst.com: Wednesday 20th May 2009
Credit Suisse has been scouring through the pub groups as a sector as they return to favour, in line with the market's enthusiasm for the recovery prospects of highly geared companies. The bank highlighted Enterprise Inns (ETI) as its preferred stock in the sector, expecting the stock to out-perform, with a price target of 224p. However the bank also stated that the pub groups are likely to see further reductions in rental income and property values this year, which will undoubtedly slow the rate of recovery. "Our preferred pick is Enterprise Inns, as we forecast the group will make progress reducing debt ahead of the May 2011 refinancing. As such, we expect its 2010 estimated calendarised P/E multiple of 4.5 to increase," Credit Suisse said. Shares in Enterprise Inns finished up by 6p at 158.75p.

Enterprise Inns have large borrowings and the poorly performing UK commercial property market. The share price of Enterprise fallen by more than 70% from their peaks mostly due to concerns over their debts, the fall in commercial property prices and the difficulties many tenants have with their leases. Now 130p.

Enterprise Inns in 1bn loan deal

THE pub giant Enterprise Inns is close to agreeing a long-awaited refinancing of its 1 billion bank loan, staving off fears that shareholders might be asked to make an emergency injection of cash.

Shares in Enterprise fell 11% on Friday amid worries that it would not be able to strike a deal with its consortium of lenders. The shares closed at 107.5p, giving it a market value of 544m.

Interim Results.

Highlights

EBITDA (pre-exceptional items) 204 million (2009: 226 million)

Average net income per pub 31.2k (2009: 32.2k)

86% of the pub estate let on substantive agreements, up from 83% at 30 September 2009

135 million gross proceeds from disposals, realising an exceptional profit of 32 million

Underlying net debt reduced by 163 million

Good rise on volume today.

Interim Management Statement.

Current trading

We are pleased to announce that we have continued to see an improving trend in trading performance since the Interim Results and, whilst remaining cautious about the underlying economic environment, we expect to deliver results for the full year in line with our expectations. The trend of stabilisation in the estate has continued and we are pleased that, with the help of reasonable weather and the FIFA World Cup, average income per pub during the third quarter was in line with that achieved in the same period last year. On a year-to-date basis, despite challenging conditions across the pub sector, average income per pub for the entire estate is down by just 2% on last year.

We have applied stricter pre-entry training requirements for new licensees which have tempered growth in the level of substantive agreements. Nevertheless some 86% of our pubs, representing 93% of net income, are currently let on substantive agreements and we anticipate that this percentage will increase in the run up to the year end. Pubs let on substantive agreements continue to perform well, with like-for-like income per pub for the year-to-date down by less than 2% compared to the same period last year.

The percentage of pubs closed or let on short term agreements (TAWs) has remained broadly constant but we are pleased that there are now just 55 pubs operating under Temporary Management Agreements (TMAs), a figure which we expect to reduce to close to zero by the end of the financial year. We continue to enjoy a strong demand from new licensees wishing to take on good quality pubs.

Enterprise is still struggling under massive debts of more than 20 times its market cap. That's helped push the share price down to a measly 30p, for a forward P/E of a stunning 1.3 -- but that's what happens when your earnings are pretty much all owed to your creditors. Profit is expected to be getting back to decent levels, but of dividend there will be none -- and there are unlikely to be any for quite some time in this dire situation.

Pub operator Enterprise Inns reported EBITDA before exceptional items of 366m for the year to end-September (2010: 405m).

Average net income per pub rose 1% to 64.2k for full year (2010: 63.6k).

90% of the estate was let on substantive agreements (2010: 89%).

Like-for-like net income in substantive estate was down 1.7% (2010: 2.3% down).

Annual revaluation of pub estate reduces book value by 173m: 4% (2010: 103m: 2%).

Enterprise had 238m proceeds from disposals and its sale and leaseback programme.

The company said strong cash generation has reduced net debt by 302m to 3.003bn.

Profit before tax and exceptional items was 157m (2010: 175m), while profit after tax was 24m (2010: 26m).

Adjusted earnings per share were 23.4p (2010: 25.9p).

Ted Tuppen, CEO, said: 'At the start of the year we set ourselves the task of stabilising the operational performance of the business whilst continuing to reduce our exposure to the banking market. We have made good progress on both fronts. The performance of our substantive estate, which makes up 90% of our estate by number, 95% by income, has continued to improve and we have reduced net debt by 302 million.

'Strong cash flows from disposals and operating activities have helped to significantly reduce bank borrowings during the year and we will continue to reduce our exposure to the volatility of the banking market by bringing forward a review of our existing banking facilities to secure appropriate bank funding for the future. In addition, we are reviewing how we can ensure that the income potential from every outlet is maximised including identification of additional opportunities to realise proceeds in excess of book value through disposal or alternative use, where appropriate.

'Whilst trading conditions are likely to remain challenging, we expect that the quality of our pub estate and the resilience of our publicans will ensure that the like-for-like performance in the substantive estate continues to improve. As we return the business towards growth, we remain committed to our initiatives and our strategy and confident that in the medium term we will be in a good position to deliver positive returns to shareholders.'

Up 12.7% This morning.

Trying September highs - 45p looks possible.

Interim Management Statement.

Highlights

· Continuation of improving trading trends, with like-for-like income per pub up 1% in the substantive estate (95% of total pub income)
· Average net income per pub up 5%, up from 1% in 2010/11
· Estimated total proceeds from all asset disposals of between £150 and £200 million for the current financial year
· Appointment of Robert Walker to become new chairman

In auction +8.9%

Serenely through 45p. +15.4%

Enterprise Inns appoints new chairman

StockMarketWire.com

Enterprise Inns has named Robert Walker to succeed Hubert Reid as chairman.

Walker will join the board as a non executive director and chairman designate following the conclusion of the annual general meeting today (9 February) and assume the role of chairman on 31 March.

Walker is currently chairman of Travis Perkins and Americana International Holdings and senior independent director of Tate & Lyle.

He was previously chairman of WH Smith, Williams Lea Group and BCA Europe.

He was also group chief executive of Severn Trent and has held a number of FTSE100/250 board appointments with BAA, Severn Trent, Signet Group, Thomson Travel and Wolseley.

Back in auction +18.9%.

Morgan Stanley from below 3% to above 5%.

Morgan Stanley from below 3% to above 5%.