What to expect from companies announcing results week commencing 23 April 2018.
Companies reporting w/c 23 April
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 23 April 2018.
St. James’s Place (Q1 trading update)
The market will be looking to see if the good performance towards the end of last year has carried on into the new financial year. Full-year results in February were well received and exceeded expectations with funds under management rising 20.5% and pre-tax profits up 32%. The healthy cash flow enabled the company to grow the final dividend by 33% and investors will be looking for any guidance on whether there might be a similar rise this year.
We currently list St James’s Place as a BUY
Companies also reporting today include: Anglo American (Q1 production results)
- BUY, London Stock Exchange Group (Q1 results) - HOLD
Croda International (Q1 trading update)
With the share price trading at an all-time high and following on from a confident set of results in February, investors will be expecting more in the way of good news. Any update on new technologies, specialist products, and investments in niche markets will be worth noting, as well as performance in emerging markets.
We currently list Croda International as a HOLD
Lloyds Banking Group (Q1 earnings release)
The up-and-down nature of the share price so far this year rather reflects market uncertainty about Lloyds. While a £1bn share buyback and increased dividend were seen as positives at the time of the full-year figures in February, profits were lower than expected and there were more unexpected PPI provisions. Any news on the net interest margin, a key performance measure, will be of interest, as will any hints on dividend payments this year.
We currently list Lloyds Banking Group as a HOLD
Persimmon (Q1 trading update)
The evidence of a slowdown in the housing sector is mounting. Despite this, housebuilders over the years and in recent quarters have still been producing fairly upbeat results, no doubt partly explained by the fundamental issue of a shortage of housing in the UK. Order books and potential buyer footfall into showroom homes have remained positive. It will be interesting to see if the consumer remained optimistic during Q1 2018, this has been the first quarter since the Bank of England raised interest rates and signalled that more are in the pipeline.
We currently list Persimmon as a HOLD
Whitbread (Q4 earnings release)
While the full-year figures will be of interest to investors there will also be a great deal of focus on the management’s reaction to the recent news that activist investor Elliott Advisors has increased its stake to 6%. The US group is keen on splitting up the company and demerging the two main businesses, Costa Coffee and Premier Inn, in the belief that they are worth more apart than as divisions within a group. Another activist investor, Sachem Head, has also built up a notable stake in recent months which means there is now significant momentum behind a split.
We currently list Whitbread as a HOLD
GlaxoSmithKline (Q1 earnings release)
The share price received a big boost after the group dropped the idea of a major acquisition of a unit from Pfizer, instead opting to take full control of a joint venture they had going with Novartis, meaning the dividend looks more reassuring. Investors will look for commentary in this acquisition and the recent disposal of its rare disease gene therapy portfolio. In terms of sales, new drug sales should still be the big driver, offsetting the decline in sales of established drugs facing generic competition. Investors will also lookout for comments on the possible introduction of a generic competitor to their Advair drug which could have a big impact on 2018 sales.
We currently list GlaxoSmithKline as a BUY
Companies also reporting today include: Antofagasta (Q1 earnings release) – HOLD, Tullow Oil (Q1 trading update) – BUY
Barclays (Q1 earnings release)
Results from the group have continued to be a bit of a mixed bag. Investors will be looking for more news on the groups restructuring and on the performance of the still important investment banking division. They will also be hoping for no more nasty surprises relating to regulatory investigations. As ever the outlook for the year ahead will be important.
We currently list Barclays as a HOLD
Taylor Wimpey (Q1 trading update)
Despite the decline in the housing sector due to the housing shortage in the UK, positive results have still been produced by housebuilders over the years. Order books and potential buyer footfall into showroom homes have remained optimistic. The Bank of England raised interest rates recently, so it will be interesting to note consumer reaction during Q1 2018.
We currently list Taylor Wimpey as a HOLD
Royal Bank of Scotland (Q1 earnings release)
The fourth quarter for the group came in below market expectations. Investors will be keeping a close eye on costs, along with any updates on the CEO’s ongoing restructuring plans. Analysts have been turning more positive on the group, with the first profit in nine years reported in February, but this has yet to be reflected in the share price this year which is down by around 4%.
We currently list Royal Bank of Scotland as a SELL
Economic Diary: week commencing 23 April 2018:
27th April, Bank of Japan interest rate decision
No changes expected in the central bank’s accommodative policy stance.
27th April, UK Q1 GDP, Preliminary Estimates
The latest set of Q1 GDP figures will go some way towards confirming the IMF’s view that the UK economy will be a laggard amongst its G7 peers. Consensus estimates are that the first quarter of the year the UK economy grew by around 0.3% compared to 0.4% in the previous quarter. The year-on-year figure remained stable at 1.4%, an unenviable figure when compared to the US and parts of a resurgent EU. No doubt, investment and consumer spending caused by Brexit uncertainty will get some of the blame.
27th April, US Q1 GDP, Preliminary Estimates
The US economy, fuelled by tax cuts, should show year-on-year GDP growth of 2.8% compared the prior 2.6%. It is, however, expected that the quarter on quarter figure could be a little weaker.
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