What to expect from companies announcing results week commencing 12 November 2018.
Companies reporting w/c 19 November
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 19 November 2018.
CRH (Q3 2018 sales and revenue)
CRH's profitability is strongly linked to the health of the global economy, in particular the US and European housing and construction activity. The market will be looking for any improvement in margins at its European distribution business, the performance in the important US region, costs, effects of FX movements and any comment regarding the momentum or not of economies into 2019.
We currently list CRH as a BUY
easyJet (Q4 2018 earnings)
The shares have had a torrid time of late, mainly due to the impact of industrial action in France and some rather downbeat comments in September from the management on expectations for the new financial year. Investors will be watching to see if there has been any change in those views. Full-year profit should fall in the £570m-£580m range and the market will be focussing on fuel costs and on any further comments on the company’s recent expression of interest in the troubled Italian airline Alitalia.
We currently list easyJet as a BUY
Halma (2018/9 half year results)
The health and safety equipment manufacturer has grown steadily over the years in-line with increased regulatory demand and the group’s expansion into international markets. Sales breached the £1bn mark recently and there are expectations that the latest trading period will build upon this, especially from its businesses in America which should benefit from tax reforms. Emerging markets should also provide good news while investors keep a close eye on its debt levels.
We currently list Halma as a HOLD
Companies also reporting today include: Compass Group (Q4 earnings release) – BUY, Telecom Plus (Q2 2019 earnings) – BUY
Johnson Matthey (Q2 2019 earnings)
Like many other industrial names, Johnson Matthey's share price has been disappointing lately and investors will hope that management maintain revenue growth expectations in the mid to high single digits. While the business is a leader in emissions technologies, for which it has been a beneficiary of increased regulations on emissions, it has a need to focus on the development of materials and chemicals for the revolution towards electric vehicles; this though will have a significant impact on research and development costs.
We currently list Johnson Matthey as a HOLD
Kingfisher (Q3 sales and revenue)
The share price really tells the story for Kingfisher this year with a steady decline. Interim results in September provided little cheer and investors will be hoping for some positive comments from the owner of the B&Q and Screwfix chains ahead of the important Christmas trading period. The performance of the troubled French DIY chain Castorama will again be a focus for the market, as will any update on the progress of the long term unification strategy. There are increasing calls for the group to split itself up with the French operations and Screwfix being separated out.
We currently list Kingfisher as a HOLD
The Sage Group (Q4 earnings release)
One of the key focus for investors will be that fact the Steve Hare; the current CFO has been appointed as successor to Stephen Kelly as CEO, but given that fact that he is an insider of the business and has been involved in the group's strategic direction, then investors should not expect too much of a deviation from current strategies. From the results, investors will expect to see the transition to subscription based revenues continue to drive sales forward and become and ever more dominant part of the group’s business model. However, there has been a slowdown in parts of the business this year, especially in Northern Europe and the MENA region; they already downgraded organic growth rates to 7-8% for the year while keeping the operating margin intact at 27.5%, whether this can actually be maintained was met with doubt by analysts a short while ago.
We currently list Sage as a HOLD
United Utilities Group (Q2 2019 earnings)
In September the group announced its business plan for the next regulatory period, which is getting ever closer. This included a reduction in average bills by around 10.5%, along with a £1bn reduction in expenditure. The warm summer resulted in additional costs in order to safeguard supplies and resources. Investors will be hoping that the concerns regarding regulators and politicians may be receding and that trading will be in line with expectations, leading to the share price and sector becoming less volatile.
We currently list United Utilities as a BUY
Companies also reporting today include: Breedon Group (Q3 2018 Sales and Revenue Release) – BUY, NewRiver Retail (Interims) – BUY, Marston’s (Q4 earnings) - BUY
Centrica (Q3 sales and revenue)
Investors will be hoping that there won’t be any nasty surprises like last Novembers profit warning. In September the regulator announced the terms of caps on energy prices, which were less severe than expected and were viewed as a positive for the group and its ability to maintain the dividend next year. Any updates on cost savings and its ability to hit financial targets will be worth noting.
We currently list Centrica as a HOLD
Companies also reporting today include: Hill & Smith Holdings (Q3 sales and revenue)
- BUY, Severn Trent (Q2 2019 earnings) – HOLD
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