What to expect from companies announcing results week commencing 29 January
Companies reporting w/c 29 January
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 29 January 2018.
Porvair (Q4 results)
A December trading update stated that profits were ahead of expectations, so investors will be expecting a positive outlook for the year ahead. The share price has indeed been strong so far this year on the back of a 2018 newspaper tip. The company makes sophisticated filters used in a variety of industries. Investors should note that the group's products are specialist and benefit the environment in areas such as emission controls, and providing protection for larger systems. In turn, many of the products need to be replaced or serviced regularly. In order to grow the business the group has expanded its facilities in the UK, China and US, which has attracted new customers.
We currently list Porvair as a BUY
SSE (Q3 trading update)
The sector has been under pressure of late with the group’s shares underperforming the market on concerns over falling dividend cover and the threat of energy caps. Any update on the proposed demerger of its supply business and merger of the retail side with Npower will be worth noting. Other areas of interest will be customer numbers and cost savings.
We currently list SSE as a HOLD
Unilever (Q4 results)
Investors will be keen to hear the company’s sales growth forecasts for the year ahead, along with what the group intends to do with the proceeds from the recent sale of its spreads division. Other areas to concentrate on will be emerging markets performance, especially in India and China. An element of caution has developed around the company, which has been reflected in the share price over the last three months.
We currently list Unilever as a BUY
Vodafone (Q3 trading update)
Investors in Vodafone should expect to see a further pickup in its key European markets as economic growth in the region accelerates. Emerging markets are also naturally expected to show revenue improvements along with data demand across all markets continue on the up. Investors will hope to see positive news out of India and its recent tie-up with a rival operator on market shares and cost synergies. Investors will still lookout for news on bolt-on acquisitions in markets where the group lacks quad-play services.
We currently list Vodafone as a BUY
Companies also reporting today include: 3i (Q3 results) – HOLD and RPC (Q3 trading update) - BUY
AstraZeneca (Q4 results)
Shares in the pharmaceuticals company have staged a good recovery since last summer’s disappointing announcement over one of its key R&D programmes. Group revenues for the year in dollar terms are likely to have continued to take a hit because of generic competition on some of its blockbuster drugs, but the impact has been abating in recent quarters to the point that the market believes that revenues should pick up during 2018. Investors will expect to see growth in Emerging market sales and hope that Brilinta keeps on track to become the company’s latest blockbuster drug. Meanwhile the bottom line will feel the impact on heavy R&D spending.
We currently list AstraZeneca as a BUY
BT (Q3 results)
This time a year ago BT revealed the scale of the impact from the Italian scandal amongst many of the other obstacles it faces. The shares have not recovered much since then as some issues still remain a big uncertainty such as the pension deficit and the health of some of their underlying markets. Its consumer focussed business in the UK, which has been its saviour in recent years could begin to feel the impact of the pinch on consumers’ pockets. Income investors will be hoping that all those issues doesn’t mount and put pressure on the very attractive dividend income the company pays out.
We currently list BT as a HOLD
Companies also reporting today includes: Vedanta Resources (Q3 production report) - BUY
Economic Diary: week commencing 29 January 2018
31 January, FOMC Meeting, Two-day meeting, January 30-31 – FED
While the US Federal Reserve is expected to increase interest rates several times this year, there are reasons why and why not the first meeting of the FOMC this year, and under the new chair, Jerome Powell, will see interest rates rise. The recent government shutdown is a reason why not, after-all, given such circumstances, rising interest rates may amount to rubbing salt in the US wound. On the other hand, recent falls in the US dollar, at a time when indicators suggest that the US economy is set for a good run of growth, is a reason to expect higher interest rates. However, given that rates went up recently, a hike in March is more likely.
2 February, US Employment Situation – Bureau of Labor Statistics
Last month, US non-farm payrolls increased by 148,000, US unemployment stayed on hold at 4.1%, but average hourly earnings rose by 0.3% on the month before. The data was slightly disappointing. We may be coming to the time when more attention needs to be paid to earnings – with unemployment so low, we might be set to see wages rise faster than normal, sparking off a bout of inflation.
30 January, Preliminary flash estimate of EU and euro area GDP, Q4 2017 – Eurostat
The last set of purchasing managers indexes covering 2017 pointed to quarterly growth of 0.8% in the final quarter. If this can be achieved, it will indeed be impressive, although such growth rates for the region are rare. However, even if the data comes in at 0.7% growth, it will still be very encouraging. Although unemployment in the region has been falling, and in Germany it is exceptionally low, across the area as a whole there is enough slack in the labour market to suggest little risk of a corresponding rise in inflation.
|28 January||Growth indicator – Confederation of British Industry|
|29 January||Financial Services Survey – Confederation of British Industry|
|31 January||Flash euro area inflation, January – Eurostat, EU Unemployment, December – Eurostat|
|1 February||Purchasing managers indexes tracking manufacturing, UK – Markit/CIPS,Euro area – Markit, US – Markit and ISM, China – Caixin and official, and worldwide – various|
|2 February||Purchasing managers index, UK Construction, January – Markit/CIPS|
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.