What to expect from companies announcing results week commencing 24 September 2018.
Companies reporting w/c 24 September
Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 24 September 2018.
Next (Q2 2019 earnings release)
The shares performed well in the first half of the year, but clouds have begun to gather over the clothing retail sector in the past few months. A trading update in late July showed sales growth slowed in the second quarter and the company said some sales might have been brought forward from August. The fact that full-year guidance was not raised at that point was also seen as disappointing by some, so there will again be much attention on that. Investors will also be looking even more intently at the company’s high street sales given the recent news from John Lewis of a 99% collapse in first half profits due to increased discounting.
We currently list Next as a HOLD
United Utilities Group (Q2 2019 sales and revenue release)
Utility groups have been under increasing pressure of late as a result of tougher regulatory reviews and political pressure. This has led to some questions being raised over the sustainability of the all-important dividends going forward. Investors will be focussing on any further comments regarding future outlook and its business plan, which it announced earlier in the month. With the share price down by around 30% over the last two years the so called defensive nature of the shares and sector has taken a hit.
We currently list United Utilities as a BUY
TUI (Q4 sales and revenue release)
TUI’s shares have struggled since the third quarter update in August which revealed the negative impact of the drop in the Turkish currency, the heatwave in Europe and air traffic control strikes in France. Cruises remained one bright spot and the market will be watching that number carefully in this fourth quarter update. The company has been careful to keep expectations under control by saying that outperformance in the final quarter of the year is unlikely, but it did also say that it expects a 10% rise in full year operating profit so the market will be looking for any change in that figure. Any further guidance on the impact of adverse foreign exchange rate moves will be of interest.
We currently list TUI as a BUY
RPC (Q2 trading update)
This second quarter update from the plastic packaging group comes as the market awaits news of the possible takeover discussions with private equity groups Apollo Global Management and Bain Capital earlier this month. The first quarter update in July was seen as slightly disappointing and the company said that differing investor views on its debt levels were constraining its ability to make further acquisitions. The company has been caught up in a growing level of unease towards the whole plastic packaging sector due to environmental concerns about plastic waste, especially in the oceans.
We currently list RPC as a HOLD
Announcements for the w/c 24 September 2018:
26 September: US Federal Open Market Committee – Federal Reserve Bank
Having kept rates on hold in the August meeting, the market consensus has swung to the view that a hike at the September meeting is likely. Despite inflation remaining around target, the US economy is still going strong by many measures including record low unemployment levels. But the rate of wage growth has been picking up and a key indicator that slack within the labour market is disappearing. A rate hike will keep the fed on its planned trajectory for interest rates into the next year or so where markets believe it should reach closer to 3%.
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