What to expect from companies announcing results week commencing 2 July.
Companies reporting w/c 2 July
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 2 July 2018.
Costain Group (Q2 2018 Sales and Revenue release)
In May the group reported trading to be in line with expectations, so investors will not be expecting any surprises. Instead, focus may be on any new contract wins and an update on the potential for new technology-led smart infrastructure. The order book has been at record levels and though improving, the infrastructure system in the UK is prone to delays, a fact that the majority of political parties agree on.
We currently list Costain Group as a BUY
St. Modwen Properties (Q2 2018 Earnings release)
The group specialises in regeneration of brownfield sites. The CEO has instigated a review of the business, which has led to some assets being sold in order to increase its new build of both residential and commercial property. The group reported in June that they had made a good start to the year, but any comments as to the health of the housing market will be worth noting.
We currently list St. Modwen Properties as a BUY
Sainsbury (J) (Q1 2019 Sales and Revenue Release)
Recent numbers from Kantar on the UK’s market share showed that Sainsbury’s fell to 15.6%, which in some ways highlights the need for sector consolidation, something that it aims to achieve with the proposed Asda merger. Other areas to concentrate on will be the performance of Argos and its online and convenience stores.
We currently list Sainsbury (J) as a HOLD
Associated British Foods (Q3 Sales and Revenue release)
ABF’s Primark discount store is one of the few rays of sunshine in the UK’s retail market; analysts still see good growth prospects in its sales and with more buying power it should see improvements in its margins. However, some have raised an eyebrow over its US expansion which may have not got off to the pace that some have expected. Investors will also learn of the impact on margins of anticipated lower EU sugar prices on the food ingredients business.
We currently list Associated British Foods as a HOLD
Persimmon (Q2 2018 Sales and Revenue release)
Investors should still expect to see strong forward orders supported by several factors including ‘Help to Buy’, low mortgage rates and the shortage of housing in the UK. However, there has been a notable fall in activity in the London market and investors will want to hear if this is impacting on the rest of the country. By looking at their peers, one would say no, but a more cautious stance to land and plot acquisition strategies could be taken by management given the number of macro-economic uncertainties.
We currently list Persimmon as a HOLD
Announcements for the w/c 2 July 2018:
2, 3 & 4 July: UK Manufacturing, Construction & Services sector PMIs for June
After some poor Manufacturing and Construction industry activity data in the past month, these figures will be looked at with much anticipation to see if the weakness we saw in the economy during the first quarter carried on into the final month of the 2nd quarter. Weak figures again in these industries will suggest that the weak growth in the economy during the first quarter was not just down to the poor weather.
5 July: US FOMC Minutes
This will be the minutes of the meeting where US policymakers raised interest rates to a target range of between 1.75-2.0%. The minutes will reveal the strength of support for rate rises, where they indicated that we could see another two hikes by the end of the year. It will also be interesting to see what mention on the economy the impending trade war could have.
6 July: US Non-Farm Payrolls and unemployment data
With a further 190k new jobs expected to have been created during June, which built on the 223k in May, there is the possibility that the unemployment rate could drop further from the current historic lows of 3.8%. But attention will also be on the rate of wage growth which has not been as impressive and which should be much higher at such low unemployment rates suggesting that the labour market is not as tight as low unemployment levels would suggest.
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