What to expect from companies announcing results week commencing 5 February.
Companies reporting w/c 5 February
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 5 February 2018.
Randgold Resources (Q4 results)
After record production levels in the first half of 2017, the Q3 production update was a little disappointing due to operation issues following a mill upgrade. However, this should have been temporary and investors should expect Q4 production to return to previous impressive levels and set further records for certain mines. With gold prices trending slightly higher as the year progressed, revenues for the full year should be good while the bottom line should also improve as costs are managed well. Nevertheless, the Q3 issues could leave a small dent in overall profitability.
We currently list Randgold Resources as a BUY
Babcock International (trading update)
The demise of Carillion and profit warning from Capita has focussed attention on support service providers and acted as drag on Babcock’s share price. The big question for investors is have these fears been overdone with regard to the company? Comments on the order book especially regarding the bid pipeline along with the international operations and view on possible contract delays will be important.
We currently list Babcock International as a BUY
Amino Technologies (Final results)
This AIM-listed company produces hardware and software products designed to enable broadband providers to offer television and other services to consumers. In December it said it expected full-year profits to be in line with forecasts, so there should be few surprises on that front. Good sales in North and Latin America have been behind recent growth, but investors will be hoping for signs of improvement in the Netherlands following some problems there.
We currently list Amino Technologies as a BUY
BP (Q4 results)
Deep restructuring and cost cutting programmes should see the big oil groups such as BP return to making huge profits that we have seen in the past. The steady rise in oil prices can only help along that path to recovery. We will though expect to see the last of additional charges made for the Gulf of Mexico disaster; meanwhile the deferred tax assets will likely be impaired due to the corporate tax changes in the US. In the meantime the attractive dividend should be maintained and investors should be looking forward management taking a more expansionary approach through increased capital expenditures and acquisitions.
We currently list BP as a BUY
Companies also reporting today include: Hargreaves Lansdown (Q2 results) - HOLD and St. Modwen Properties (Q4 results) - BUY
Severn Trent (Trading update)
The sector has been under pressure over the last six months as a result of growing regulatory and political risk. Analysts have also raised concerns over future dividends. Any update on cost savings and efficiencies will be worth noting. Comments regarding market concerns especially with regard to the dividend are likely to dominate investors’ thoughts.
We currently list Severn Trent as a HOLD
Smurfit Kappa (Final results)
Volume growth in Europe and the Americas has helped this packaging group in recent times, although the rising cost of recovered fibre and currency movements have proved to be headwinds for the business. The rise of online shopping has increased demand for corrugated cardboard and other packing products but the market will be looking out for comments on whether box prices are rising and if higher costs can be mitigated.
We currently list Smurfit Kappa as a BUY
Companies also reporting today include: Rio Tinto (Q4 results) – BUY, GlaxoSmithKline (Final results) – BUY and Tullow Oil (Q4 results) - BUY
Compass (Q1 trading update)
The company is still coming to terms with the tragic death of CEO Richard Cousins in Australia at the beginning of the year. New CEO Dominic Blakemore has taken up the reins early and will provide a trading update at the AGM. At the full year results in November the company said it continued to make good progress in its North American operations although the offshore division remained weak. The market will be focusing on those two areas as well as the order pipeline. Compass has said it expects its tax rate to fall from 26.5% to 24% as a result of the corporate tax changes in the US so any guidance on full year results will also be of interest.
We currently list Compass as a BUY
Tate & Lyle (Q3 trading update)
The share price has struggled to make any headway over the last 12 months, despite guidance being slightly raised at the interim stage in November. The market continues to have doubts over the group’s ability to hit its 2020 targets, along with continuing pressures on its core ingredient business. Investors will be keen to hear an update on demand for sweeteners and on the outlook for the year ahead.
We currently list Tate & Lyle as a BUY
Companies also reporting today include: Smith & Nephew (Q4 results) - BUY
Economic Diary: week commencing 5 February 2018
8 February, Inflation Report and Bank of England Monetary Policy Committee Meeting and Minutes - Bank of England
Back in November, all but two members of the Monetary Policy Committee (MPC) voted to increase interest rates to 0.5%, and in December all members voted to keep them on hold. Another hike this month is not likely, but some members may vote for a rise. The Inflation Report will give a sense of what the Bank of England is thinking. Since the last report, the pound has risen against the dollar, alleviating the pressure on inflation, but the oil price has risen, increasing pressure. Evidence from the surveys suggests that the global economy is picking up nicely and the UK economy is strengthening on the back of this. The more hawkish MPC members may see these factors as a reason to warrant higher rates.
8 February, Residential Market Survey - Royal Institution of Chartered Surveyors
Last month the closely watched RICS headline index rose to plus eight after seeing steady declines for months, dropping to zero in November. The rise in the index seems to reflect a wider sentiment, that the UK economy is seeing a pick-up. But the RICS survey also points to very low levels of new buyer enquiries and instructions, indicators of very low demand and supply.
Further announcements include:
Index of production, December – Office for National Statistics
UK Trade, December - Office for National Statistics
Construction output in the UK, December and October to December - Office for National Statistics
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