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Is this FTSE 100 growth stock a bargain buy after today’s results?

Costa Coffee and Premier Inn owner Whitbread (LSE: WTB) has been on a tear in recent years with rapid expansion of both flagship brands across the UK and overseas. And today’s Q1 trading update shows this progress has continued with total sales rising 7.6% year-on-year.

While much of this growth has come from adding new hotel rooms and Costa outlets, overall like-for-like growth of 2.9% shows the company’s brands are still resonating with existing customers as well as new ones.

However, there are warning signs that all may not be well. Costa like-for-like (LFL) growth slowed to 1.1% in the quarter, down from 2.6% during the same period a year prior. This suggests to me that the introduction of new outlets is cannibalising sales from existing locations. Management seems to realise this and has promised a greater focus on food offerings to increase footfall. But shifting away from the core coffee offer is a dangerous game to play over the long term.

The good news is that Costa’s contribution to group profits still pales in comparison to that of Premier Inn, which continues to hum along nicely. The value hotel chain was the belle of the ball in Q1 with LFL sales growth of 4.7% and total sales growth of 9.2% driven by new room additions and a resilient overall market.

With growth continuing nicely and a valuation of 15.3 times forward earnings being at a multi-year low, Whitbread may appear a bargain buy. But with the company’s heavy dependence on the highly cyclical (and potentially peaking) hotel industry, as well as slowing same-store Costa sales, Whitbread is not a stock I’d buy at this point in time.

Flying into trouble?

It’s a similar story for another FTSE 100 growth hero of recent years, easyJet (LSE: EZJ). The budget airline has done remarkably well to gain market share at the expense of legacy carriers across Europe, but it now appears that the highly cyclical nature of the aviation industry is beginning to take a negative turn.

The crux of the matter is that when confronted with slowing demand growth from consumers, airlines almost always opt to flood the market with cheap fares to retain market share and increase sales at the expense of profits.

Indeed, as airlines and industry bodies increasingly warn of a cooling market, easyJet has responded by slashing fares that led constant currency revenue per seat to fall 9.7% in H1. While increasing capacity by 8.4% led to small revenue gains it also caused pre-tax losses to mount from £18m to £236m.

While the company will certainly return to profitability in the seasonally stronger H2, this is still a worrying position. This is especially true given management is forecasting similar 8.5% capacity growth in H2 and continued low-single-digit declines in revenue per seat in the quarter to come.

easyJet is a well run airline but at the end of the day, European carriers increasingly look as if they are marching straight into the abyss by adding more and more capacity while watching profits dwindle. With the company’s shares pricey at 17.5 times forward earnings and dividends due to fall thanks to its dividend payout policy, I’ll be steering well clear of easyJet.

One growth share that doesn’t have the same cyclical problems is the Motley Fool’s Top Growth Share of 2017, which has increased sales every year since going public in 1997. And although the firm’s shares have already returned over 150% in the past five years, the Fool’s Head of Investing reckons they could triple in the coming decade.

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Ian Pierce has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.