Questor share tips: Goal Soccer Centres continues to score

The shine has certainly come off the England football team after a disappointing World Cup performance and endless allegations about the private lives of its players.

Wayne Rooney to play for England against Switzerland, says Fabio Capello
The shine has certainly come off the England football team after a disappointing World Cup performance and endless allegations about the private lives of its players. Credit: Photo: PA

Goals Soccer Centres

123p +7.5p

Questor says Buy

But it seems the beautiful game has not lost its attraction for amateurs, and five-a-side football pitch operator Goals has reported a 3pc increase in like-for-like sales since the end of this summer's tournament in South Africa.

That's an improvement on the 3pc drop in like-for-likes in the first half of the year, when each of Goals' centres lost an average of 23 days trading to the snowy weather. That cost it £800,000 in lost profits.

First-half profits fell 30pc to £2.72m pre-tax, hit by a £1.1m charge on interest rate hedges. Excluding that, profit slipped 3pc to £3.8m.

The company now says it expects full-year results to be "within the range of current market expectations," after saying in July profit would be "towards the lower end" of analysts' forecasts. The consensus forecast is for pre-tax profits of £9.3m in 2010, up from £8.76m last year.

There were other positive signs in yesterday's results for Goals investors - the company maintained its first-half dividend at 0.675p. Goals has also opened four new sites so far this year, four more are planned in 2010, and another six for 2011. The company has a pipeline of 40 sites. Keith Rogers, managing director, says it can take around five years to get all the necessary local authority permissions to open a pitch, especially if they are located on school or university campuses. This is a "significant barrier to entry" for smaller companies, he said. Goals now has about 41pc market share in Britain.

After yesterday's first-half results and sales update, analysts at Numis, Brewin Dolphin and Altium all raised their rating on the shares to 'buy'.

Questor sold Goals shares in May 2009 at 198p, after buying them at 126½p. The reason for revisiting the stock now is the very low valuation - after plunging over the last year on concern about debt levels and exposure to the weak consumer economy, the shares are yielding 1.48pc and the price-to-earnings ratio is 9.53 times. When Questor sold last year, the PE ratio was 14.9 and the yield 1pc.

Goals has expanded its borrowing facilities to £55m from £47m, meaning it has enough headroom before testing covenants, and says earnings are back on a firmer footing. Questor says buy.