What to expect from companies announcing results week commencing 6 August.
Companies reporting w/c 6 August
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 6 August 2018.
HSBC (Q2 earnings release)
Investors will be keeping a close eye on costs which rose in the last update. With the majority of its lending at variable rates, rising interest rates are a positive for income. Any comments on the health of Asian markets and the US-China trade wars will also be of interest. Expect further updates on future restructuring plans regarding scaling back from certain markets and beefing up of others.
We currently list HSBC as a BUY
InterContinental Hotels (Q2 earnings release)
In May IHG reported a 3.5% increase in revenue per room in the first quarter. That was better than expected and the market will be interested to see if that continued into the second quarter. The US is showing some positive signs and some of the markets affected by terror attacks have begun to recover but investors will be focused on growth in the key emerging markets such as China.
We currently list InterContinental Hotels as a HOLD
Intertek (Q2 earnings release)
Shares in the global testing and quality assurance group continue to trade at near-record levels as the company has seen continued demand for its services. The recovery in the commodities market has helped as has the ongoing demand as a result of increased regulatory needs in both developed and emerging market regions. However, US administrations rhetoric towards trade may be unwelcome for global trade flows and it will be interesting to see if management make any comment surrounding this or whether they see opportunities arising from the political instabilities.
We currently list Intertek as a BUY
Standard Life Aberdeen (Q2 earnings release)
The latest news of another mandate being withdrawn from the group will not have eased investors’ fears ahead of these results. The market will want to hear positive news regarding the merger and about future synergies. Any update on emerging market performance and comments on Brexit will also be of interest. With the shares trading close to a 12-month low market expectations appear to be somewhat muted.
We currently list Standard Life Aberdeen as a HOLD
Other companies reporting today include: Hargreaves Lansdown (Q4 earnings) – HOLD
Hill & Smith Holdings (Q2 earnings release)
In May, the company said order intake since mid-March in its UK road and utilities businesses had improved following problems related to project delays and adverse weather. The shares have outperformed so far this year but the market will be looking at the order intake level in these figures and will be interested in whether there is any change in full-year guidance. Any comments on the prospects of further acquisitions and how the company sees the government’s plans for its road investment scheme will also be of interest.
We currently list Hill & Smith as a BUY
Prudential (Q2 earnings release)
The group’s last set of full year results published in March was reasonably good but was overshadowed by management’s plan to split the group up between the UK and its overseas operations. This will take time but investors will be seeking more clarification on the progress of this and execution timings. Investors would also like to hear of updates to the business following some organisational changes, along with management moves. Meanwhile, the group should continue to see good results from its international operations. Investors will also hope to see its dividend being raised in time to become more comparable to some of its peers.
We currently list Prudential as a BUY
Other companies reporting today include: Paddy Power (Q2 earnings release) – HOLD, Morgan Sindall (Q2 earnings release) – BUY, Glencore (Q2 earnings release) - HOLD
G4S (Q2 earnings release)
The market will be hoping for further signs that restructuring and investing in efficiency programs has continued to show through. Investors will be expecting a return to revenue growth which fell over the first quarter. Any update on technology led services and its Cash360 system will also be worth noting.
We currently list G4S as a BUY
Other companies reporting today include: TUI (Q3 earnings release) – BUY, Coca Cola (Q2 earnings release) – HOLD, Randgold Resources (Q2 earnings release) – BUY, Cineworld (Q2 earnings release) – BUY, Legal & General (Q2 earnings release) – HOLD, Evraz (Q2 earnings release) – HOLD
Announcements for the w/c 6 August 2018:
Friday 10 August: UK Q2 GDP (Preliminary)
Expectations for the growth of the economy during the second quarter are higher than the first where severe weather conditions had their part to play. Other economic indicators during the second have been pointing towards a bounce back with consensus forecasts at 1.4%. This would be supported by the first of the monthly figures that were recently published for May. A strong number will have justified the Bank of England’ interest rate rise and cement the belief that the weakness in the first quarter was just a blip.
Friday 10 August: UK Industrial, Manufacturing & Construction Production for June
Industrial and manufacturing production data are both expected to jump to 1.9% year-on-year during June, possibly partly supported by a weaker sterling, but construction activity is expected to once again lag behind and possibly fall by 0.5% while housebuilding activity moderates.