What to expect from companies announcing results week commencing 20 May 2019.
Companies reporting w/c 20 May
The Share Centre gives its thoughts on what to expect from companies announcing results week commencing 20 May 2019.
Severn Trent (Q4 2019 Earnings Release)
The political situation in the UK is once again increasing the focus on the sector. The group may in its outlook comment on the potential threat of a future Labour government. Other areas to note will be updates on the dividend policy, costs and the next regulatory period.
We currently list Severn Trent as a HOLD
Marks & Spencer (Q4 2019 Earnings Release)
Difficult times for the high street retailer as can be seen from its underperforming shares. In February the company announced a 50/50 joint venture with Ocado to boost online sales, but it came at a hefty price for shareholders – including a £600mn rights issue and 40% cut in the dividend. The market will not be expecting much improvement in sales of clothing and homewares, but it will be looking at food sales more closely as that has been the stronger area for the company in recent times. An update on the extensive restructuring plans will also be of interest.
We currently list Marks & Spencer as a SELL
SSE (Q4 2019 Earnings Release)
Energy utilities have had a tough time lately, a lot of which they cannot be blamed for; such as the unusual weather patterns and increasing regulatory pressure on pricing. There has been a fair amount of restructuring within the group including the consolidation of its renewable assets. Late last year there was the disappointment of the news that the merger of its retail division with Innogy had been scrapped so investors will hope for further comment as to whether there are any other demerger plans. The management have already guided full year earnings will be at a new lower range of 64 to 69 pence, failure to meet this or any threat to its dividend will see its share price reach new multi-year lows just like its peer and rival Centrica.
We currently list SSE as a HOLD
Intertek (Q1 2019 Sales and Revenue Release)
The global quality assurance and testing company has been a steady performer for some years now and nothing too different is expected for the first quarter of the year. The increased demands for quality and sustainability from consumers and safety and risk management from regulators and corporations should continue to support a good structural backdrop for the company from both developed and emerging regions. The company has made a number of acquisitions, so investors will expect updates on the integration progress. As a company with testing laboratories at ports across the world, it will be interesting to see if the tariff feud between the US and China will lead to any comments by management regarding the impact on trade volumes or any additional expenses relating to administration.
We currently list Intertek as a BUY
Tate & Lyle (Q4 2019 Earnings Release)
The share price has been boosted of late with suggestions the company could be a takeover target. The market will be keen on an update on the group’s strategy plan, which is focussing on ingredients for drinks, dairy and soups, sauces and dressings. The increasing demand for healthier diets and cutting of sugar content could benefit the company further. As ever the performance in North America, its biggest market, will be important.
We currently list Tate & Lyle as a BUY
United Utilities Group (Q2 2019 Earnings Release)
The market has focussed on the regulatory review and political pressure on the sector. This has led to increased volatility in the share price, especially when talk of a future Labour government is touted. Investors concentrate on the dividends with a current yield of around 5%. Any comments on the outlook for the industry, costs and future dividend policy will be worth noting.
We currently list United Utilities Group as a BUY
Informa (Q1 2019 Sales and Revenue Release – Trading update)
Last year was a big one for publishing group Informa with the £4bn acquisition of UBM. The combination should work well as the two groups have complementary geographic and business portfolios which will enable economies of scale and cost synergy savings. Revenue and profit growth was modest last year although the exhibitions and journals business performed well. The company now has a new divisional structure so it will not be easy to compare with previous results but investors will be looking for any comments on expectations for 2019 as a whole.
We currently list Informa as a BUY
Following on from the good unemployment figures of the week just gone, economists may expect the consumer to remain upbeat as the rate of inflation will be well below the growth in average earnings at around 1.8% year-on-year from the previous month’s 1.9%. Clothing and food prices could once again act in the opposing direction to the rise in transportation costs we saw in the previous month, as the recovery in energy prices takes time to feed through the system. Nonetheless, the rate of inflation is highly likely to be below the Bank of England’s target range and have little impact on the chances of a rate rise for the time being given the political uncertainty.
Later in week we have the latest UK Retail Sale numbers. The March year-on-year figures were surprisingly good but largely explained by the unusual weather patterns this time last year and stocking up by fearful consumers ahead of Brexit. The weather should once again be a big factor if the numbers produced are volatile for April.
Outside the UK the key economic event is likely to be the US Federal Reserve’s policy meeting minutes. It will be interesting to see whether any pressure by Trump is reflected among policy makers’ discussions. Although no interest rate changes are expected just yet, the market senses that rates cuts rather than rises will come along soon as suggested by the latest shape of the yield curve.
All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.