Sales hit a record of £1,044.3m at pub group Greene King (LSE: GNK) during the first half of the firm's current financial year. Greene King said on Wednesday morning that adjusted pre-tax profit rose by 14.6% to £139.0m during the period. Shareholders will also enjoy a pay rise, with the interim dividend rising by 4.1% to 8.8p.
Greene King appears to be well positioned for the festive season. But another stock that looks increasingly attractive to me is fast-growing Revolution Bars Group (LSE: RBG), which has just opened four new venues in times for the Christmas party season.
Both companies look affordable, and offer attractive dividend yields. But which one could be the right choice for your portfolio?
Property & pints: a winning formula?
Greene King is busy updating and converting the pubs it acquired when it bought Spirit Pub Company last year. In today's results, Greene King says that sales have risen by an average of 30% at the 50 pubs which received "brand conversions" during the first half of the year.
Operating profit increased across the pub's operating divisions, pushing adjusted earnings per share up by 4.3% to 36p. This puts Greene King on track to meet full-year forecasts of 72p per share, which equates to a forecast P/E of 9.6.
Of course, one reason for this low valuation is that Greene King has a lot of debt. Net debt of £2.2bn equates to 4.2 times the group's earnings before interest, tax, depreciation and amortisation (EBITDA). That's very high, but it's made more acceptable by Greene King's £3.7bn property portfolio.
This gives the group a loan-to-value ratio of 59%. That's also relatively high, but the group's debt has an average life of eleven years and is mostly fixed rate. If the market remains stable, these borrowings should gradually start to fall.
In the meantime, Greene King's 4.7% dividend yield looks attractive. Although Greene King isn't a bargain, income investors may want to take a closer look at current levels.
This growth star could double
If you are looking for an exciting small-cap company with serious growth potential, you may want to consider Revolution Bars. The group, which has a market cap of £91m, is rolling out its upmarket Revolution and Revolución de Cuba bar formats across the UK.
Revolution's sales rose by 6.9% last year, while adjusted earnings per share rose by 14% to 14.6p. The group also paid a 4.8p dividend, giving a trailing yield of 2.6%.
Revolution has a massive advantage over some of its peers. The group's expansion is being funded entirely from its operating cash flow. There's no debt. This significantly reduces the risk of investing. The group's high margins and strong cash flow also mean that when expansion slows, cash available for shareholder returns should rise sharply.
I'm not really sure why Revolution Bars' shares have performed so badly this year. They've risen by just 5%, and currently trade on a forecast P/E of 11, with a prospective yield of 3%. That looks too cheap to me, given that earnings per share are expected to rise by about 14% over each of the next two years.
In my opinion, this well-run business looks like a decent buy at current levels.
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Roland Head has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.