What to expect from companies announcing results week commencing 18 February 2019.
Companies reporting w/c 18 February
The Share Centre gives its thoughts on what to expect from companies announcing results week commencing 18 February 2019.
Reckitt Benckiser Group (Q4 2018 Earnings Release)
Despite having a few wobbles recently the group maintained its guidance for revenues to grow by 2.3%. It has been helped by its expansion into the emerging markets. However there are increased voices in the markets suggesting that the group's margin may have peaked. News that the CEO will be retiring, who has successfully led the group since 2011, will make it a difficult task for his replacement to match. Investors will want to hear of the integration progress with Mead Johnson and whether it managed to turn around issues at the foot care brand Scholl.
We currently list Reckitt Benckiser as a HOLD
InterContinental Hotels Group (Q4 2018 Earnings Release – Preliminary)
After a solid set of interim results in August IHG then reported a weaker-than-expected third quarter in October with revenue per room growing at just 1%. The main reason was a slowdown in the US and Middle East and investors will be watching the performance of both those areas in these full-year figures. The company has continued its series of small acquisitions with the recent purchase of the luxury spas group Six Senses. While the shares have slightly underperformed the market over the past year investors have benefited from a $500m special dividend.
We currently list InterContinental Hotels Group as a HOLD
HSBC (Q4 2018 Earnings Release)
The company’s focus is increasingly geared towards Asia. Recent fund manager surveys show they are bullish for emerging markets for 2019, which may help ease investor’s nerves over the ongoing trade spat between the US and China. With around 43% of profits coming from Hong Kong and increasing investment in China, there is a need for the uncertainty to be removed. As ever with banks there will be a focus on costs, the performance of its investment banking division and the group’s outlook for the year ahead.
We currently list HSBC as a BUY
Companies reporting this day include BHP Group (Q2 2019 Earnings Release) – BUY
Lloyds Banking Group (Q4 2018 Earnings Release)
The shares, which are a favourite amongst private client investors, had a torrid 2018 falling by around 25%. The market will be looking at areas such as cost cutting, its net interest margin (the difference between the rate they borrow and lend), dividends and more information on its new strategy plan. With its business being predominately UK and as a large mortgage provider any comments regarding the housing market and Brexit will be worth noting. There may also be an update on recent rumours that it intends to beef up its presence in wealth management.
We currently list Lloyds as a HOLD
Companies reporting this day include Glencore (Q4 2018 Earnings release) – HOLD
BAE Systems (Q4 2018 Earnings Release – Preliminary)
The half year revenues were impacted by the slow delivery of the Typhoon jets but management made reassurances that some of this production should be made up during the second half. Investors will have noted a number of smaller contracts recently being won and will hope the order book continues to build over the $40bn level. In an efficiency drive it announced the loss of 2,000 jobs; investors will therefore hope to see how far they have progressed along these lines. It will be interesting to see if management mention the political fallout from the murder of the Saudi journalist and Saudi Arabia's involvement in Yemen and whether being reliant on such a nation creates unwanted risks and attention.
We currently list BAE Systems as a BUY
Morgan Sindall (Finals)
There should be few surprises for the market in these full year figures as the company said in November that its performance would be in line with market expectations. Investors will be watching to see if the property services division, which maintains many public sector houses and building, has managed to deliver the forecast improvement in second-half profit and whether the office fit-out business sees good growth. A rise in the order book would be welcome and the shares, which have been rather lacklustre over the past year, could certainly use some good news.
We currently list Morgan Sindall as a BUY
RELX (Q4 2018 Earnings Release – Preliminary)
There has been solid like for like growth across all of its divisions and an improvement in margins. Of its divisions, Risk Solutions, which provides information to help prevent and spot fraud, has demonstrated the best growth. Investors will be looking for more of the same and will be keen to be updated on the group’s outlook for the year ahead. The defensive qualities of the group have helped the share price move back to within touching distance of an all-time high.
We currently list RELX as a BUY
Barclays (Q4 2018 Earnings Release)
The weakness in the share price over the past year tells its own story. Much of the concern revolves around the bank’s strategy and the significant part that the investment banking division plays. There was some good news on that front in October with equities and fixed income trading better than expected, and the return to dividend growth is welcome for investors. However, the recent news that activist investor Edward Bramson has taken a stake in the company suggests that pressure may be applied on the CEO Jes Staley to change his strategy.
We currently list Barclays as a HOLD
Companies reporting this day include Anglo American (Q4 2018 Earnings Release) – HOLD, Centrica (Q4 2018 Earnings Release) – HOLD
Pearson (Q4 2018 Earnings Release)
The group recently updated the market on trading, along with guidance for 2019 and again highlighted pressure on its important US higher education business. After a period of recovery the shares have started to plateau as analysts concerns over the year ahead grew, especially over the increasing dependence on cost cutting and lack of revenue growth. Higher education US revenue for 2019 is expected to be flat to down 5%.
We currently list Pearson as a HOLD
Tuesday 19, UK Jobs data
With shockingly poor GDP data for the fourth quarter and December, and other weak economic indicators such as industrial and manufacturing productivity, consumer confidence and businesses, should we be surprised if we finally see a reversal of the declining unemployment rate? The Bank of England and other economists have been reducing their forecasts for employment growth, nonetheless, the unemployment rate remains at healthy levels and should not deviate much from the 4% consensus and wage growth should still exceed the rate of inflation.
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