What to expect from companies announcing results week commencing 7 May 2018.
Companies reporting w/c 7 May
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing
7 May 2018.
William Hill (Q1 trading update)
Interesting times for the bookmaker. The full-year figures in February were mixed, although if you strip out the impairment charge on the value of the Australian business, profits rose 19% and the trading performance generally was good. Most interest will be on how the mobile services are performing, but the US operations will also be a focus. Any comments on reports that the government is planning to lower the maximum stake on the fixed odds betting terminals in high street shops from £100 to £2 will be noted.
We currently list William Hill as a BUY
Compass Group (Q2 earnings)
In February the global catering group reported a strong first quarter performance, especially in the core North America region, and slightly raised its full year revenue guidance. Since then sterling has been volatile so any update on full-year guidance will be interesting. Europe and Latin America have also been fairly strong regions for the company but the market will also be looking to see any signs of improvement at the struggling offshore business.
We currently list Compass as a BUY
Companies also reporting today include: Provident Financial (Q1 sales ) – We do not currently have a view on Provident Financial
Barratt Developments (Q3 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, as this has been the first quarter since the Bank of England raised interest rates and signalled that more are in the pipeline. Management of Barratts have already expressed their caution through a more conservative approach in their land bank acquisition strategy.
We currently list Barratt Developments as a HOLD
ITV (Q1 trading update)
The share price has remained under pressure over the last 12 months mostly as a result of falling advertising rates. Investors have grown use to growth at the Studios business and would be aware that the company gave guidance for advertising revenue to increase by 1% for the period. With the World Cup just around the corner expectations for a boost to the second quarter have been growing.
We currently list ITV as a HOLD
Morrison (Wm) (Q1 sales)
The sector has grabbed the headlines recently on the back of the Sainsbury/Asda proposed deal. Analysts have already cautioned that the bad weather over the first quarter could have hit sales. The group has been restructuring its product range, hoping to improve efficiency and customer service. Any comment for the year ahead and on the retail environment will be worth noting.
We currently list Morrison as a HOLD
Next (Q1 trading update)
Tough times for many clothing retailers on the high street at present. Management at Next were very honest in March when they admitted that the performance of some of their clothing ranges and newer stores was poor last year. Investors will be watching to see what action has been taken to address that, as well as looking to see if online sales are still growing nicely. Full-year profit guidance was previously given as £705m.
We currently list Next as a HOLD
Randgold Resources (Q1 earnings)
After the Q3 operational difficulties, Q4 production made up some lost ground to still take 2017 figures to record levels. There is hope and expectation that this carried on into the first quarter of 2018 and that the average cost of production also headed back downwards.
The political and macro-economic uncertainties experienced in the first quarter lifted the price of gold and this will give a very good boost to year on year comparisons as well as a modest boost compared to Q4 for revenues.
We currently list Randgold Resources as a BUY
Companies also reporting today include: BT Group (Q4 earnings) – HOLD, RSA Insurance Group (Q1 trading update) – HOLD
Economic Diary: Announcements for the w/c 7 May 2018:
10th May: UK Construction, Manufacturing and Industrial output for March
Construction activity during January and February has been weak and there is some expectation that severe winter weather during March hampered activity in the sector further. Year on year manufacturing activity during Jan and Feb recovered and there continues to be expectations that sterling’s weakness is having positive impacts on exports. This feeds into industrial production which should also benefit from improving output in the oil industry. However, the forward looking PMI figures haven’t been encouraging.
10th May: Bank of England Interest Rate decision
A few weeks ago it seemed all but certain that the MPC would be raising interest rates in May. But given some downbeat economic data published in the last 2-3 weeks including much weaker inflation, retail sales and Q1 GDP falling short of expectations, the picture has changed with no rate changes expected.
10th May, CPI, US Bureau of Labor Statistics
Year on year CPI in March topped 2.4%, the highest in a year and pushed upwards by higher used car prices, however this may ease the April figures, meanwhile increased oil prices in recent months should also feed through.
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