The stock market has continued to fall in an environment of rising interest rates and rampant inflation. However, I’m beginning to wonder if these two FTSE 100 shares are now so low that they could be value investments. Is now the time for me to buy before a potential market bounce? Let’s take a closer look.
Rising revenue and profit
During the pandemic lockdowns, many people turned to online gaming and gambling to pass the time.
It should come as no surprise, then, that betting firm Entain (LSE:ENT) is on my radar. In the past month, the shares have fallen 7% and this may provide an opportunity to pick up a bargain.
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The business has seen a recent resurgence in its retail segment, as more shops have reopened following months of lockdown.
For the six months to 30 June, group revenue grew 19% to £2.1bn. Underlying cash profit also increased by 17%, finally settling at £471m.
With more shops open, however, operating costs rose by 31%. These costs do pose risks to the company going forward.
It’s possible that rising energy prices and the cost of running shops begin to eat into profit margins on future balance sheets.
Despite this, the firm has performed well in the face of immense challenges, and I think that it’s well-equipped for any short-term issues that may arise.
A hospitality recovery?
Conversely, Whitbread (LSE:WTB) was hit very hard during the pandemic. The firm – a UK operator of restaurants and hotels – was forced to close its doors for months on end.
More recently, though, things seem to be turning more positive for the business. Yet in the past month, the share price is down nearly 6%.
Lockdowns resulted in a string of poor results for Whitbread. For the year ended February 2021, the company reported a pre-tax loss of £1bn.
By the following year, however, this loss had turned into a pre-tax profit of £58.2m. This is an indication that the firm is beginning to recover as restrictions become a thing of the past.
The ability to continue trading, though, came at a cost. It now has a debt pile of £4.08bn, with a cash balance of just £980m.
Despite this, it has a consistent dividend yield of 1.42%. While this isn’t a market-leading yield, it’s still good to know that I could derive income from this investment.
Demand also looks to be improving. For the 13 weeks to 2 June, year-on-year accommodation sales growth hit 227.4%. This figure is also 21.3% greater than pre-pandemic levels.
Overall, there are a few different reasons why I believe the shares of both of these companies could soar in the event of a market bounce. Entain is clearly resilient and Whitbread is now enjoying better operating conditions. To that end, I’ll add both businesses to my portfolio soon.
