Less 21% in 6 months! Should I buy the sauce in this FTSE 250 action?

JD Wetherspoon (LSE: JDW) is a low performance stock of Ftse 250 index. 7% to date and 21% in six months have been reduced. For four years, it has lost more than half of its value.

However, Wetherspoons remains a leading pub chain in the United Kingdom. And profitability has been recovered from the pandemic, with a restored dividend. In the long term, it should be able to take market share as more smaller rivals pass.

Should I buy some shares of the spoons in the fall? Here are my thoughts.

Resistant trade

On March 21, the company reported that its first half covered 26 weeks to January 26. Income increased 3.9% by just over 1 billion, with similar sales (LFL) that increased 4.8%. This was driven by the growth of LFL sales in the bar (+4.3%), food (+5.4%) and fruit machines (+12.4%).

During the period, two Wetherspoons pubs were opened (the great assembly in Marlow and the Lion and the Unicorn at the London Waterloo station) while six were sold. Ended with 796 pubs.

In seven weeks since the end of the period, LFL sales increased 5%. Taking into account the hard commercial environment throughout the hospitality sector, I think this performance is strong.

Unfortunately, profits are under pressure. In the first half, the operational gains decreased 4.3% to £ 64.8m. The operating margin fell to 6.3% of 6.8%, mainly due to the costs of labor and public services, which were £ 30.6 million higher.

The net gain reached £ 24.9 million, which was lower than in the same pre-pandemic period of 2019/20.

Amazing outlook

Looking towards the future, the company warns that it increases national insurance and minimum wage will result in additional costs of approximately 60 million per year. That amounts to approximately 1,500 per pub, per week.

When commenting on the results, said President Tim Martin, quite bleak: “The combination of much higher VAT rates for pubs than supermarkets, combined with an increase in labor costs.. “

I wondered how long it would happen before Martin was trapped in the different treatment of supermarkets. He took 59 words from his statement before they mentioned.

However, he is right when repeatedly pointing out the advantage of unfair prices, and supermarkets represent the competition. It is dramatically cheaper to stock up on a couple of boxes of Tesco For the rear garden to spend an afternoon buying pints in the beer garden of a pub.

Should I buy?

In addition to standard commercial taxes, Wetherspoons pays the alcohol duty, the fruit machine service, the sugar tax, the fuel tax, the costs of the premises and, in some places, the television licenses. As of April 1, he will also pay national insurance and higher labor costs, as mentioned.

Given all this, I am not surprised that the amount of pubs in England and Wales has fallen below 39,000 for the first time. Clearly, they are being taxed in oblivion.

But although I sympathize with this, it doesn't really make me optimistic about investment.

However, maybe I am missing an obvious bargain. Because the action is quoted at a low cost, such as spoons, with only 11 times profits, while offering a well -backed dividend yield of 2.2%.

Meanwhile, the company's long -term objective is to operate 1,000 pubs. Again, perhaps that generates the price of the highest shares.

However, since the costs are established in “Weigh a lot“In the industry, I am not anxious to invest.