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The Whitbread share price isn’t the only FTSE 100 bargain I’d snap up today

A major disposal of assets often turns out to be more value accretive for a company’s shareholders than a major acquisition. I believe this will be the case with Whitbread  (LSE: WTB). The £8.2bn-cap FTSE 100 group has agreed to sell its Costa Coffee business to The Coca-Cola Co for £3.9bn.

My Foolish colleague Roland Head has described the sale as a great-tasting deal for Whitbread. I agree with him and I’ll explain shortly why I believe the stock is a bargain buy today. First, I want to tell you about another FTSE 100 company that I also rate a great-value buy.

Sunken share price

Cruise ship group Carnival  (LSE: CCL), which owns the line of the same name, and a number of others, including P&O Cruises and the Cunard Line, is the biggest cruise ship operator in the world. Its shares have often looked expensive on paper. However, they’ve sunk significantly from an all-time high of 5,380p in August last year, including a 10% drop on the release of the group’s annual results yesterday afternoon. I reckon they’re now way oversold. At 3,850p, and with the company having posted record revenue and earnings, they’re as cheap as chips by historical standards.

Revenue for the financial year ended 30 November was up 7.8% to $18.9bn and adjusted earnings per share (EPS) increased 11.5% to $4.26 (335p at current exchange rates). The board hiked the dividend 21.9% to $1.95 (153.5p). At the current share price, the price-to-earnings (P/E) ratio is 11.5 and the dividend yield is 4%.

Management said cumulative advance bookings for fiscal 2019 are considerably ahead of the prior year, and that it expects adjusted EPS in the range of $4.50 to $4.80. The midpoint of $4.65 (366p) makes the forward P/E just 10.5, compared with 16 this time last year. Stock markets are jittery at the moment, and I reckon this is a great opportunity to buy a slice of a high-quality business with a strong driver for growth. As my Foolish colleague Rupert Hargreaves has discussed, demand for cruises has increased rapidly over the past few decades and looks set to continue for many years to come.

Premier investment

Whitbread’s disposal of Costa Coffee — set to complete in the first half of 2019 — will enable it to focus on its remaining business: the UK’s biggest hotel chain, Premier Inn. There was never a compelling reason for having these two businesses under the same roof, as there were few synergies, and the sale of Costa received the overwhelming support of shareholders.

I believe Premier Inn has a bright future as a standalone company. Management gave underlying EPS for the first half of the current year, with Costa excluded as a discontinued operation. The annualised figure is 236.4p, giving a P/E of 18.8 at a current share price of 4,450p. However, I believe it’s a lot cheaper than that P/E suggests, due to the huge chunk of cash to come in from the Costa Sale, and what the company has called “the significant structural growth opportunities available to Premier Inn in the UK and internationally.”

Management reckons it has a growth runway in the UK that could take its current 74,000 rooms to 100,000 and beyond. Meanwhile, the potential to repeat the success in Germany, where its current pipeline is near 6,000 rooms, makes for a compelling opportunity, in my view.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Carnival. 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.