MIDAS SHARE TIPS: Ten pin group is in line for returns that could really bowl you over!
Children and teenagers spend around seven hours a day looking at screens, from mobile phones to laptops to PlayStation terminals. Their parents are not far behind – and sometimes even worse.
Now, however, some families are realising it is important – and pleasurable – to spend time together. Many are choosing to do so at bowling centres, which are age-agnostic, sociable and reasonably priced.
The trend is good news for Ten Entertainment Group, the UK’s second largest ten-pin bowling chain, which recently released strong half-year figures and expressed confidence about the year ahead. Ten shares are £2.41 and should move higher, as chief executive Duncan Garood pursues a strategy expected to deliver consistent growth in sales, profits and dividends.
On target: Ten Entertainment is set to benefit from a trend for family fun
Neil Woodford was a fan but he has now sold out completely. His shares have been snapped up by other investors, impressed by the business and its prospects.
Bowling has several points in its favour, particularly today, when economic conditions are uncertain and social division is rising.
As a pastime, it is companionable yet competitive. People of every generation can play a game or two, have a chat, grab a bite and still have change from £15. Perhaps most importantly, they can have fun.
According to Garood, customers increasingly appreciate the fact bowling can be played as a family, is a physical, offline activity, encouraging young and old to leave the house – and their screens – for a few hours. Yet British consumers visit ten-pin bowling centres just 1.4 times a year on average, far less often than they go to the cinema.
For Garood, this spells opportunity. There are around 300 bowling centres in the UK, almost 200 of which are independently owned. Ten operates 45 sites and has been gradually increasing that number, buying independent operations as they become free, including two this year.
The firm intends to continue in that vein but it has also started to build centres from scratch, taking over vacant department stores, for example, and refitting them as bowling venues.
According to Ten Entertainment Group boss, customers increasingly appreciate the fact bowling can be played as a family, is a physical, offline activity, encouraging young and old to leave the house – and their screens – for a few hours
Existing sites offer room for growth too. The company invests continually in all its centres, to make sure they look attractive, the lanes work and service is attentive.
Around half the group’s revenue comes from bowling, with another quarter from food and drink and the rest from other amusements, including ping pong.
Garood was chief executive at Punch Taverns and Bill’s Restaurants chain before joining Ten so he knows a thing or two about eating and drinking. He is revamping the group’s menu to include more choice, better quality produce and vegan options, as well as local favourites, such as Tennent’s lager in Scotland.
New concepts are filtering into the company’s centres too, including Hyperbowl, a form of bowling involving LED lights and plenty of excitement, and Escape Rooms, where half a dozen people are locked in a room, willingly, and asked to solve puzzles to escape.
These initiatives are both popular with customers and highly lucrative. Now, Ten has signed a deal with Houdini’s, considered Britain’s best Escape Room operator, under which these rooms will be rolled out across the Ten chain.
Garood is also working on Ten’s website and a new improved version will be launched this year, along with better systems to inform customers of offers and promotions.
Analysts expect this year’s turnover to increase by 12 per cent to just over £85million, with profits up 18 per cent to £16million. The company pays out 60 per cent of all its spare cash in dividends and the 2019 payout is forecast at 11.8p, putting the stock on a yield of almost 5 per cent.
The company’s board is impressive too, including City veteran Christopher Mills, who owns around 25 per cent of the group’s shares.
Midas verdict: Downturns come and go and markets rise and fall but ten-pin bowling seems relatively resilient to economic and political cycles. Ten Entertainment has delivered consistent underlying growth over the years, the company is well managed and there is a clear strategy for continued expansion. The dividend yield adds to the stock’s appeal. At £2.41, the shares are a buy.