Is Marston’s a penny stock worth buying?

Marston’s is a penny stock that’s on my investment radar. But should I buy now? I take a closer look at this UK pub operator.

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Marston’s (LSE: MARS) is a penny stock that has increased by 13% in 2021 so far and by almost 70% in the past year. It has clearly been a victim of Covid-19 but are things looking up for the company?

Well, Marston’s reported in its interim results that trading was encouraging. But it’s still early days. I’m not a buyer of the penny stock just yet. Here’s why.


As I mentioned, the company has indicated that conditions are improving. What I like about Marton’s is that most of its pubs are well placed to benefit from the the boom in staycations that’s expected in this second half of the year. It has also seen encouraging levels of bookings to date.

Its recent investment in additional outdoor trading areas seem to be paying off. It has enabled the pub operator to capitalise on the pent-up demand. I expect Euro 2020 helped sales as well.

I believe that the vaccine rollout and the full easing of lockdown restrictions should boost sales. The UK remains on track for Freedom Day on 19 July, which should help pub activity return back to pre-pandemic levels.

Change at the top

It’s all change at the top for this penny stock. Not only is there a new CEO, but also a new CFO. It’s worth mentioning that these hires have been promotions from within the firm.

It has promoted its current CFO, Andrew Andrea to take over from CEO Ralph Findlay in October. It’s worth adding here that Andrea has been with Marston’s since 2002. So I think it’s safe to say that he probably knows the firm and industry well enough to take on the big job. 

In terms of the new CFO, it has promoted current director of group finance, Hayleigh Lupino, with effect from 3 October. She has more than 18 years of experience at the company, which should help Marston’s as it recovers from the coronavirus crisis.


I’m concerned about the level of the company’s debt though. At present, total net debt stands at over £1.6bn, which is more than triple its current market cap of approximately £500m. If there are any Covid-19 delays or another lockdown, this could hinder the penny stock.

But the main thing is that Marston’s is making cutting its liabilities a priority. It aims to reduce its borrowings to below £1bn by 2025. But it’s one thing saying and another delivering. I’d like to see some evidence of this before I dip my toe in.

Rejected offer

I can’t mention Marston’s without highlighting that it rejected a takeover offer in February from Los Angeles-based Platinum Equity for almost £700m. The pub operator said that it significantly undervalued the company. And I’d have to agree with this statement.

I can’t blame the US firm for trying to pick up British assets on the cheap. But what this has done has placed Marston’s on the takeover radar. Of course this is just me speculating, but another investor could come along and snap up the company for the right price.

Should I buy?

For now, I’m monitoring this penny stock. I’d like to see what the new CEO has to say first. He may make a few changes to the strategy. But the stock is definitely on my watch list.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be considered so you should consider taking independent financial advice.

Nadia Yaqub has no position in any of the shares mentioned. The Motley Fool UK has recommended Marstons. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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