Mecca Bingo owner trades up after returning to profit

Shares in Mecca Bingo owner Rank Group (LSE:RNK) were up ‘lucky seven’ percent in Thursday’s dealing after the firm reported a return to profit.

Pre-tax profit for the financial year ended 30 June amounted to £15.5 million, compared to a £123.3 million loss a year ago.

Revenue was up 9% for year at £734.4 million, with growth seen across all of Rank’s casino and bingo brands.

John O'Reilly, the CEO of Rank Group, stated that the company has seen continued improvement in trading due to ongoing investments in people, products, and facilities.

Looking ahead, meanwhile, Rank anticipates a 7% rise in employment costs for 2024/25, signaling some headwind against future profitability.

Greg Johnson, analyst at stockbroker Shore Capital, is bullish about Ranks prosects and valuation – which he reckons aren’t properly priced into the current share price.

“Digital momentum is strengthening, land-based revenue and profit base continues to recover and proposed gambling reform, when enacted, could bring a step-change in performance and the long-term opportunity.

“This is failed to be reflected in the current valuation.”

He reckons Rank can build annual operating profits closer to £100 million, and as such gives it a ‘buy’ rating.

In London, Rank shares were up 5.2p or 7.43% to 75.20p.