Companies reporting w/c 26 February

What the expect from companies reporting week commencing 26 February

Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 26 February 2018.

Monday

Hammerson (Q4 results)

The property sector has been hit hard since the EU referendum and retail-related property companies have been hit especially hard due to signs of lower retail sales on the high street.

Hammerson has been resilient so far but is now merging with Intu and hoping that the increased scale will help. It will be a pan-European REIT which will focus on opportunities in Ireland and Spain.

We currently list Hammerson as a HOLD

Keller (Q4 results)

The ground engineering specialist has had a mixed period lately doing well in EMEA regions but has found life a bit tougher in North America, its largest market, where activity fell back in certain metropolitan areas while the poor weather held back activity in Florida and Texas.

Despite this, contract wins have been encouraging and the group should benefit from the promise of increased infrastructure spending in the US. Investors will hope for a turnaround in some of its Asia Pacific regions. Sterling’s weakness will play a large factor in the group’s expected double digit increase in group revenues.

We currently list Keller as a BUY

Tuesday

Persimmon (Q4 results)

The housebuilding sector continues to do very well as buyer sentiment remains buoyant given attractive mortgage rates, high employment levels and overall demand growth for housing. The group has already reported 2017 sales of £3.42bn, up 9% on last year. While investors expect profitability to have risen well too, we know that housebuilders are facing increasing costs related to finding skilled labour and increased material prices.

The group has strong cash balances for which those interested in this market will expect more returned via increased dividends and capital returns. They will also eagerly await the size of the forward order book and footfall to showrooms in the latest few weeks given the rising interest rate (although modest) environment faced in the UK.

We currently list Persimmon as a HOLD

Companies also reporting today include: GKN (Q4 results) – HOLD and Standard Chartered (Q4 results) - HOLD

Wednesday

Associated British Foods (Q2 trading update)

The focus will be very much on the performance of Primark, the value fashion chain owned by ABF, as the last update implied that like-for-like sales have fallen in recent times.

Prospects for the various other businesses owned by the group, especially the sugar business, will also be of interest.

We currently list Associated British Foods as a HOLD

Informa (Q4 results)

The major event related to Informa is its acquisition of rival UBM which has been agreed by both parties but is yet to complete. Investors will no doubt expect management to highlight the merits of the tie-up but also hear of the progress on integrating previous acquisitions.

Its current businesses have had a mixed period, those keeping an eye on this investment will expect its Academic Publishing, B2B and Global Events divisions to have continued to do well and hope that some improvements have been experienced in Knowledge & Networking and the energy industry activity picks up.

Sterling weakness will artificially boost the full year results with the possibility of reported profits doubling.

We currently list Informa as a BUY

ITV (Q4 results)

After a poor period, the share price has started to pick up again, helped by early signs of an improvement in advertising and bid rumours. The production business has been leading the way for the group, but investors will still be keen to hear the outlook for advertising revenue for this year and hope that the forecast 1% increase over the fourth quarter has been achieved. They will also be hoping that the football World Cup later in the year will give the group a boost.

We currently list ITV as a BUY

Companies also reporting today include: St. James's Place (Q4 results) – BUY, Taylor Wimpey (Q4 results) – HOLD and Admiral (Q4 results) – HOLD

Thursday

WPP (Final results)

There have been some recent signs of an improvement in advertising demand. Investors will be hoping that the group’s outlook has not worsened following on from three cuts to sales growth last year.

The company is usually regarded as the bellwether of the advertising industry and as such, is widely regarded as a global economic barometer. Areas to concentrate on will be emerging markets, demand for on-line media and spending by consumer brands.

We currently list WPP as a BUY

Companies also reporting today include: CRH (Final results) – HOLD, Costain (Final results) – BUY and Rentokil Initial (Final results) - HOLD

Friday

Mondi (Final results)

There has been increased interest in companies with a South African bias on the back of recent political developments. This group has a wide geographic spread and product diversification, which is regarded as a positive. Analysts have been highlighting the potential for increased dividends in 2018.

Investors should keep an eye on cost pressures and currency moves, along with the outlook for the year ahead. This packaging and paper group is not one of the better known FTSE 100 shares, but looks well positioned to benefit from the increased demand for consumer packaging.

We currently list Mondi as a BUY

Companies also reporting today include: London Stock Exchange (Final results) - HOLD

Announcements for the week commencing 26 February 2018:

27 February, US Consumer Confidence, February – Conference Board

US Consumer confidence has been riding high for some time, with the closely watched measure from the Conference Board recently hovering around a 17-year high. Last month, the index stood at 125.4, consistent with growth in US consumption rising above the 3.8% annualized rise recorded by official stats for Q4.

Subsequently, another measure of US consumer confidence (from the University of Michigan), this time for February, has also risen sharply, possibly with US consumers’ anticipation of tax cuts.

It seems that, if anything, US consumer confidence is set to rise even further.

28 February, flash estimate euro area, inflation, February – Eurostat

Fears that inflation may be set to rise in the US and UK, leading to markets revaluating interest rate expectations, may have been behind recent stock market falls. As a consequence, more attention than normal will be focused on the latest inflation figures for the euro area.

However, last month, euro area inflation was just 1.3%, from 1.4% the month before. Core inflation (ex food, energy, alcohol, and tobacco) was just 1.0%.

1 March, Purchasing Managers Index, manufacturing, February – Markit/CIPS

After seeing a nice pick-up at the end of last year, with the PMI for UK manufacturing rising to a 51 month high in November, the index for January fell to 55.3, the lowest reading since June last year. At a time when PMIs tracking US and euro area manufacturing are booming, this is a little worrying.

Did the index for February see an improvement?

Further announcements include:

1 March EU unemployment, January – Eurostat
1 March Purchasing Managers Index for manufacturing, February – euro area (Markit), China (Caixin and official), US (ISM and Markit), various others worldwide (mainly Markit)
2 March UK Purchasing Managers Index for construction, February – Markit/CIPS.

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