This weeks company announcements and economic news
Companies reporting w/c 15 January
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 15 January 2018.
Rio Tinto (Q4 operating results)
During the first half of 2017 there weren’t too many surprises from the group’s production figure, but investors will hope that some of disruptions to production for both copper and iron ore won’t be repeated due to industrial disputes and maintenance works. Without production issues investors should be expecting revenues to continue to pick up as sustained global economic growth feeds through to better commodity prices. Investors will additionally appreciate any updates on the progress in regards to expansion projects and whether management anticipate beginning increasing capital expenditures again.
We currently list Rio Tinto as a BUY
Johnson Matthey (trading update)
Over 60% of group profit comes from the Emission Control Technology division, which has performed well of late and despite the group increasing its involvement in developing batteries for electric cars, the group still remain geared to demand for cars and trucks. The CEO has pointed to prospects for the global economy being difficult to predict so comments over the year ahead will be significant.
We currently list Johnson Matthey as a HOLD
Burberry (Q3 trading update)
The half year results showed a reasonable pick up in sales as Chinese and Hong Kong based shoppers returned to its stores. Sales in the UK too were good, helped along by travelling tourists taking advantage of the weaker pound. We would expect these dynamics to have remained for the last quarter, but will there be pressure in Burberry from the squeeze on the incomes of the UK consumer? There could be an argument that wealthier Burberry shoppers won’t feel the pinch as much. The shares have not recovered since the last update when it was announced that its creative director will be leaving and the fact that there is a risk of alienating the current customer base as management plan on taking the brand further upmarket, updates on these issues will be welcome.
We currently list Burberry as a HOLD
BHP Billiton (Q2 operating results)
As with peers, BHP should see the benefits of improving sustained global economic growth feed through to better commodity prices. BHP has also seen good operational performances recently so investors should expect to see overall better sales figures from the group. Investors will also look to see if they have managed to further reduce the cost of production, especially in iron ore. With the improving outlook, we await to see if management’s confidence has returned to once again make big capital expenditures on capacity expansion programmes.
We currently list BHP Billiton as a BUY
Associated British Foods (Q1 trading update)
Although this is a conglomerate with a wide range of businesses, the fashion clothing chain Primark has come to dominate it in the minds of many investors thanks to its steady growth. In November, the company reported full year figures ahead of expectations and the outlook was reiterated by chairman Charles Sinclair in December at the AGM. The sugar division saw a good increase in profit and investors will be interested in any comments on expectations for the rest of the year in that area.
We rate Associated British Foods as a HOLD
Experian (trading update)
The share price has made a steady recovery since the late summer fall off. Investors will be hoping that this momentum can be backed up with a positive trading update and outlook for the year ahead. Interestingly, there have already been two analyst upgrades this year. Any updates on emerging market expansion and for new products in areas such as fraud, health and analytics will be worth noting. Expectations for organic revenue growth will be another area to note.
We currently list Experian as a BUY
William Hill (Q4 trading update)
Shares in the bookmaker have recovered strongly since late October when the government launched a consultation on reducing the maximum stakes on fixed odds betting terminals. Then a third quarter trading update in November provided some reassurance for investors as the company said it was on track to achieve full-year targets. The market will be interested to hear any update on the news in November that it was in talks with CrownBet over a possible merger with its Australian subsidiary.
We currently list William Hill as a BUY
Whitbread (Q3 trading update)
These are interesting times for the owner of Premier Inn and Costa coffee. Interim results in October missed market expectations once again and showed a clear divergence in the performance of the two businesses with growth slowing noticeably at Costa. That news sent the shares down despite the company saying it believed it remained on track to meet full year expectations. In December, the shares spiked up following news that an activist investors had taken a stake, fuelling hopes that Costa might be sold.
We currently list Whitbread as a HOLD
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