Deutsche Bank stays at 'buy' on Mitchells & Butlers on improved outlook for costs

In particular, they highlighted the improvement in the balance sheet as the company closes in on its target for a roughly £140m reduction in its debt pile after de-risking its long-standing pension deficit.

On the operational side of things meanwhile, the company's like-for-like sales were growing faster than its costs.

Furthermore, the outlook for the latter had improved, despite the headwinds from the national living wage.

Due to those lower estimates for Mitchell & Butler's costs, Deutsche Bank analysts bumped up their estimate for its earnings before interest and taxes in FY2024 by 5% and that for FY2025 by 3%.

The valuation, they added, was "cheap" given that the shares were changing hands on 12.9 times their estimate for the 2024 price-to-earnings multiple for a 20% discount versus its tangible net asset value.