What to expect from companies announcing results week commencing 17 September 2018.
Companies reporting w/c 17 September
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 17 September 2018.
Ocado (Q3 Sales and Revenue Release)
Interim results in July were seen as slightly disappointing as the company dropped from a pre-tax profit last year to a loss of £9m. Severe weather played a part along with costs associated with completing what the company believes is the largest automated warehouse for online grocery retail in the world. The market will be watching to see if the company still expects earnings before interest, tax, depreciation and amortisation to improve significantly in the second half as it forecast in July. Any further details of the significant deal signed with large US grocer Kroger in May will also be of interest.
We currently list Ocado as a HOLD
Kingfisher (Q2 2019 Earnings Release)
These figures will be of considerable interest to the market given the company’s last comments in August when it revealed that profit margins were under pressure. The second quarter trading update was notable for the poor performance at the Castorama chain in France and the company promised to provide details on measures it would be putting in place to try to support that business. Overall sales improved in the second quarter and investors will be looking particularly at the UK and Screwfix to see if it continues to perform well.
We currently list Kingfisher as a HOLD
Smiths Group (Q4 2018 Earnings Release)
The diversified conglomerate produced a fairly disappointing set of half year results as revenues and profits fell marginally short of expectations. However the trading update since has been more encouraging, investors will expect more good things to come out of the John Crane division which is benefitting from increased confidence and spending in the oil industry. The Flex-tek division has been doing well from the US housing market activity while the Detection and Interconnect divisions have also been pleasing investors. The focus though may turn to the Medical divisions where there was disappointment over EU regulation and the temporary suspension of some of its products and the loss of contract in the US, guidance from management was that this division would experience a sales fall of roughly 2% for the year.
We currently list Smiths Group as a BUY
Announcements for the w/c 10 September 2018:
19 September 2018, UK August Inflation
We had good news this week for consumers where we found out that the gap between wages and inflation for July had widened. We could see that gap widen further in August as the consensus view is that price rises slowed down from 2.5% to 2.3% over a year on year basis. However the month on month figure is expected to show a half percent increase and there could be several explanations for that including the extreme weather hitting the supply and lifting prices of farm produce, while sterling weakened on Brexit uncertainties and oil prices edged higher.
20 September 2018, UK August Retail Sales
With the good early summer weather we saw positive retail sales figures from both the high street and on online shopping but the weather in August returned to some form of normality and the likelihood is that sales of products that did well between May and July slowed down. There is therefore a high chance that the previous months 3.5% year-on-year growth came down during August. But better economic data showing wages outstripping inflation could give support to retailers. The ongoing theme though will be of the tough environment in general for the high street and how much retail activity is swinging towards online will still grab media attention.
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