What to expect from companies announcing results week commencing 12 November 2018.
Companies reporting w/c 12 November
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 12 November 2018.
Experian (Q2 results)
Attractions include steady returns, strong cash flow and margins, limited concerns over competition and a diversification strategy that has moved it away from relying on the bank sector. Areas for investors to concentrate on will be the effects of foreign exchange moves which have been a recent headwind. As will the performance in the US and emerging markets. Following on from solid results so far this year, the shares have outperformed year to date.
We currently list Experian as a BUY
Vodafone (Q2 results)
Investors will be very disappointed with the recent share price performance; the downturn which many believe has been driven by a slowdown in Europe, the EU regulation on roaming charges, UK handset financing and lower service revenues out of its Indian operations. Investors will therefore be seeking reassurances that these issues are being contained from the new management team led by Nick Read. The market will want to know that the integration of broadband acquisitions in Europe are going well and that data demand growth and emerging market growth continues at a rapid pace.
We currently list Vodafone as a BUY
Taylor Wimpey (Q3 trading update)
The shares of Taylor Wimpey and the house builders have had a modest bounce since the budget which was quite tame compared to what some had feared for the sector. Help to Buy will come to an end but the likes of Taylor Wimpey have plenty of time to adapt to the changes. Meanwhile, investors will be expecting that Help to Buy has kept the forward order book relatively strong. However, in the market as a whole, the rapid pace of revenue growth is over as it becomes harder to match the production increases of recent years and house price growth has stalled. Still, investors should expect to see good capital returns through generous dividends.
We currently list Taylor Wimpey as a HOLD
Companies also reporting today include: Land Securities (Q2 results) - HOLD
British Land (Q2 results)
These are tough times for commercial property developers, especially those focused on retail space on the high street. Investors will get an idea of what to expect the previous day when Land Securities is due to report its interim figures. British Land has less than half of its assets in retail but has seen its shares fall back in recent months, in common with many others in the same sector, as investors have become concerned in the wake of the failure of House of Fraser and falling sales at Debenhams. The level of CVAs (Company Voluntary Agreements) will also be a focus for investors as they are an indication of businesses which are in trouble and where rent may be less certain. Brexit is a further issue for British Land given its exposure to office and retail space in the London region.
We currently list British Land as a HOLD
Companies also reporting today include: SSE (Q2 results) - HOLD
Royal Mail (Q2 results)
The news on 7 November of management changes as a result of ongoing restructuring could over-shadow the trading update, which comes ahead of the group’s most important period. It has been a difficult year for Royal Mail which culminated in an October profit warning, which in turn led to the shares hitting an all-time low. Costs saving targets have been missed and its core UK operations were described as being "significantly below plan". Any comments regarding the all-important Christmas period will be worth noting.
We currently list Royal Mail as a HOLD
Companies also reporting today include: Tullow Oil (Q3 results) - BUY
13 November, UK Sep/Oct unemployment data
It is probable that unemployment stayed a lowly 4%, the same as the previous three months despite the relatively slow pace of economic growth. More interest though will be paid to the rate of wage growth which in the previous month breached 3%. Another rise will almost certainly raise the MPC’s view that slack in the labour market is fading and wage, and therefore inflation pressures could build in the economy.
14 November, UK October inflation data
The September annual inflation rate eased back to 2.4% from 2.7% as the price increase of food items, transport and leisure activities slowed down. Investors will want to see the CPI rate head closer to the target rate of 2%, this may be too much to ask in such a short period, especially since we are seeing wage growth in the economy at much higher rates and the impact of higher oil prices in the summer months is still feeding its way through the system.
15 November, UK October retail sales
Despite the gloom on the high street, UK retail sales growth during the summer months remained relatively robust, partly explained by the extremes of weather earlier on during the year, sporting events and continued growth of online sales. For October, the consensus view is that the retail growth still remained relatively strong at roughly 3.6% and a lift upon September’s 3.0%.
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