What to expect from companies announcing results week commencing 21 May 2018.
Companies reporting w/c 21 May
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 21 May 2018.
Marks & Spencer (Full-year results)
Investors will be hoping that these figures provide the shares with the same sort of boost that rival Next received after its recent trading update. The market will be focusing on the performance of the food business given the weak figures in the third quarter statement in January. There have been some encouraging signs that the new management team on the clothing side is having some impact, but investors will be watching sales in particular. Cash levels will be important as dividends have historically been good but with cover falling back and the yield at 6.5% the market will be looking for reassurance.
We currently list Marks & Spencer as a HOLD
Babcock International Group (Q4 earnings)
The share price has struggled over the last four years as a result of problems in the sector, delays to government spending, increasing costs and short sellers targeting the company. This resulted in the shares falling out of the FTSE 100 in December. The group lowered revenue forecasts slightly in February. Any comments regarding the future order book and its international operations will be important.
We currently list Babcock International as a BUY
Vedanta Resources (Q4 earnings)
The recovery in commodity prices will provide a big boost to full year revenues, but improve production levels across many of its commodities, some could be at record levels which will also be a key driver. Investors will also be keen on hearing on future capital expenditure plans as commodity markets steadily improve. However, mining bans in certain Indian states will obviously be a dent and investors will hope that improved cash flow lead to a reduction of the group’s high debt levels.
We currently list Vedanta as a BUY
Companies also reporting today include
Severn Trent (Q4 earnings) - HOLD
Intertek Group (Q1 trading update)
Investors would hope and expect, to a certain extent, that the great year they had in 2017 has followed through to Q1 of 2018. Commodity markets have remained healthy along with global trade volumes which should lead to high activity levels in its quality assurance testing facilities at major ports. The increasing regulatory environments and higher quality standards, even in emerging markets, should continue to be a key driver. We may hear of more acquisitions and the progress made on integrating past acquisitions.
We currently list Intertek as a BUY
Kingfisher (Q1 trading update)
Full-year results in March, from the owner of the Screwfix and B&Q DIY chains, contained little to cheer about for investors, and the shares have weakened since then. The issues for Kingfisher are largely around the French business, which has struggled for some time, but there have also been sign of weakness at B&Q. It must be said that the underlying performance can be difficult to judge given that the group’s transformation plan is having a widespread impact, but hopefully that is a fairly short-term factor. Cash flow and the performance of the growing Screwfix business will also be of interest to the market in this update.
We currently list Kingfisher as a HOLD
Tate & Lyle (Q4 earnings)
Once known for its sugar, the group now specialises in supplying ingredients to the food, drinks and other industries. The new CEO is set to announce his initial strategy plan, which may overshadow the results. Other areas to concentrate on will be emerging markets, new products, margins at its food ingredients business and the US. Analysts have been concerned over pressure on its core business and the ability to hit its 2020 targets.
We currently list Tate & Lyle as a BUY
Companies also reporting today include
United Utilities Group (Q4 earnings) - BUY
NewRiver REIT (Q4 earnings) - BUY
SSE (Q4 earnings)
The group may comment more on regulatory issues and on the Npower merger which has been referred by the competition watchdog. After underperforming the market over 2017 the share price has benefitted from a partial return to so called defensive sectors. The last update in March increased expectations on earnings for the year to more than 120 pence. With most investors focussing on the dividend, any comments regarding future payments will be worth noting.
We currently list SSE as a HOLD
23 May: UK April Inflation Data
This is a key piece of data that will determine the future interest rate path. With impact of sterling’s plunge fading, we should see another month where price increases slowly drift back lower and closer to the Bank of England’s long term target of 2%. However, the recent spike in oil prices could work against this.
23 May: US FOMC minutes
This will be the release of the minutes of the meeting earlier this month where policy makers decided not to raise rate, but the split in the vote and discussion had will give a much better bearing on the future path of US interest rates. Most in the market still expect another 3 rate hikes during the current year.
24 May: UK April Retail Sales
March’s retail sales proved to be very disappointing with many pointing the blame on the severe weather. However, more questions will be asked of consumer confidence levels if we don’t see retail activity bouncing back on the back of shoppers catching up. The political and Brexit uncertainty will still get the blame despite the last month showing that consumer real income levels turned positive again.
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.