Next weeks company announcements and economic news
Companies reporting w/c 8 January
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 8 January 2018.
Micro Focus International (Interim results)
The large acquisition of Hewlett Packard software assets (HPE) was finally completed in early September and the performance and prospects for those operations will dominate these results. The company has been trying to improve its operating profit margin and progress on that will be of interest as will the level of cash generation. Any comments on dividends will also be a focus for the market given the company’s appeal to income-seekers.
We currently list Micro Focus International as a BUY
Wm Morrison (Q4 trading update)
The retail Christmas trading updates are always keenly anticipated. The sales growth of 2016 and early 2017 appears to be stalling for Morrison’s, not helped by the emergence of Aldi and Lidl. The market place is very competitive and crowded and investors who have seen the share price come under pressure will be hoping for some solid like for like sales growth.
We currently list Wm Morrison as a HOLD
Persimmon (Q4 trading update)
Investors should expect to see activity holding up for the house builders through footfall to showrooms and forward sales as housebuilders continue to benefit from the shortage of housing in the UK, the attractive mortgage rates and government’s incentives towards the sector. The latest interest rate rise should not have had any real impact but there has been a noticeable trend in the slowdown of house price growth amid the uncertainty created by Brexit. Persimmon and its peers are still likely to make mention of the rising costs of labour and raw materials, however investors should still look forward to good capital returns made by the sector.
We currently list Persimmon as a HOLD
Tullow Oil (Q4 trading update)
The interim results so far for 2017 have been fairly encouraging and have shown a bit of a turnaround at the group led mainly as a result of the improved oil price. This should be even more of a feature as average oil prices headed closer to $60 during the final quarter. Investors will also look at the group’s operational performance from their TEN and Jubilee fields which were better in the prior two reporting periods leading management to upgrade overall production guidance for the year from West African operations to between 85k to 89k barrels of oil equivalent per day. However, it may be premature to expect management to comment on the debt situation which is large while investors should still expect some assets to be written off despite rising prices.
We currently list Tullow Oil as a BUY
J Sainsbury (Q3 trading update)
Can Argos give the numbers a boost? The share price would suggest that the market is not expecting much in the way of new-year cheer from these numbers. In early December the company’s overall market share had fallen to 16.3% and expectations for like for like sales growth are around 0.6%. Despite cost savings grocery margins remain under pressure.
We currently list J Sainsbury as a HOLD
Marks & Spencer (Q3 trading update)
The past two years have been rather disappointing for shareholders in M&S, so they will be hoping for better news in 2018. That begins with this all-important Christmas trading update, especially given a better-than-expected update from rival Next this week. The market will be focusing on the performance of the clothing and home business and looking to see if the improvement seen in the last update has continued. The food side has been slightly weaker in recent months so that will also be of interest.
We currently list Marks & Spencer as a HOLD
Tesco (Q3 trading update)
There appears to be growing hopes that Tesco’s seasonal trading numbers will show that the group remains on track to restore some confidence in the company and its restructuring plan. With a market share of around 28.2% they are starting again to benefit from its sheer size and buying power, along with the green light for the Booker deal.
We currently list Tesco as a HOLD
Announcements for the w/c 8 January 2018:
10 January, UK industrial production, November – Office for National Statistics
According to the purchasing managers’ index (PMI) tracking UK manufacturing in November, the sector is close to booming. The PMI rose to a four-year high. According to the ONS, UK manufacturing expanded by just 0.1% in October, while industrial production was flat. If the PMIs are to be believed, UK manufacturing is set to lead a UK recovery. Did the ONS data for November support this narrative?
12 January, US consumer prices, December – U.S. Bureau of Labor Statistics
With the US Federal Reserve, apparently still planning to increase US interest rates this year, what happens with US inflation is especially important. In November, the headline rate was at 2.2%, with prices rising by 0.4% month on month. With oil prices rising since then, we may see further increases. However, core inflation, with energy and food stripped out, stood at just 1.7%, suggesting that underlying inflation is still quite modest.
|9 January||EU unemployment, November – Eurostat|
|10 January||UK trade, November – Office for National Statistics, Construction in the UK, November – Office for National Statistics|
|11 January||Help-to-buy ISA, Q3 – Office for National Statistics, Profitability of UK companies, Q3 – Office for National Statistics|
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