The Investment Column: Profits rise 58% at PizzaExpress

If dough rose like the share price of PizzaExpress, the restaurant chain would be in serious trouble. The group has seen its market value multiply 10-fold to pounds 500m in the space of four years, with results for the year to June adding another pounds 25m yesterday.

Turnover rose by 60 per cent, of which only 9 per cent came from like- for-like sales. The rest of the growth came from 32 new restaurants during the year and 32 franchises bought in last October. As a result, profits rose by 58 per cent to pounds 16.2m, including pounds 660,000 from disposals.

There are now 150 outlets in the UK and the City has raised the potential ceiling from 200 to as much as 300. Domestic saturation could be only four to five years away, but the first international franchise has opened in Cyprus and moves are afoot to take the concept to the US, Italy, Spain, France, the Middle and Far East.

Greig Middleton is forecasting underlying profits of pounds 22-23m for the current year putting the shares at 759p, up 31.5p, on a forward multiple of 30 times forecast earnings, which compares with an asset value of only 17p. If growth hits a flat spot the shares could prove indigestible to investors with a delicate constitution. High enough.