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Whitbread Share Price Recoils Ahead of Earnings. Is it a Buy?

Whitbread share price is still in a bear market even as the hotel and hospitality industry stage a comeback. The shares have fallen by more than 20% from its highest level this year as strong demand and high cost of doing business converge. It was trading at 2,570p on Monday, where it has been in the past few days. This price is about 14% above the lowest level this year.

WTB earnings preview

Whitbread is one of the biggest hotel and hospitality companies globally. It is a company that owns popular brands like Premier Inn, Hub, and Zip. Its other brands are Cookhouse, Thyme, TableTable, and Beefeater among others. It owns about 880 hotels in the UK and Germany.

Whitbread share price has dropped due to the rising risks of a recession and inflation risks. Data published last week showed that UK’s inflation rose to more than 10% in October and analysts expect that the situation will get worse in the coming months.

High inflation has been offset by the falling pound and euro. A weaker euro has some tailwind effects to Whitbread since it leads to more demand by American tourists. Indeed, the number of American tourists in Europe has risen sharply recently.

A good example of this is the strong results by InterContinental Hotels Group (IHG). The company said that business travel in the US rose to where it was before the pandemic started. Its revenue rose by 28% year-on-year while global RevPAR rose by 11% of its pre-pandemic levels. This growth was helped by leisure and business travel.

Therefore, there is a likelihood that Whitbread will publish strong results. Its first quarter of the fiscal year had like-for-like sales of 10.8% compared to its pre-pandemic levels. Accommodation rose by 21% while food and drink dropped by 7.5%. In a report, analysts at UBS said that they expect the company’s revenue will be 1.26 billion pounds. The consensus estimate by City analysts is that the company’s revenue rose to 1.3 billion pounds.

Whitbread share price forecast

The daily chart shows that the Whitbread stock price has been in an overall bearish trend in the past few months. Along the way, the stock formed a descending channel shown in green. It is now slightly below the upper side of this channel and is slightly above the 50-day moving average. The RSI has been tilting upwards.

Therefore, the stock will likely pull back after the earnings as investors target the lower side of the channel. A move above the resistance point at2,660p will invalidate the bearish view.

Whitbread share price