We give our thoughts on what to expect from companies announcing results week commencing 18 November 2019.
Companies reporting w/c 18 November
easyJet Plc (Q4 2019 Earnings Release - Pre Close)
It is only just over a month since the last update from easyJet so there should be few big surprises for investors in these full year results. At that stage the company said forward bookings for the first quarter of its new financial year were in line with this year, but the market was slightly disappointed by the lack of further detail on forward guidance, so that will be a focus again. The shares have recovered well in recent months, perhaps due to a sense that the company is benefiting from pilot strikes at two of its main rivals, BA and Ryanair.
We currently list EasyJet as a HOLD
Melrose Industries Plc (Q3 2019 Sales and Revenue Release – Trading Update)
The engineering buyout firm reports its Q3 update on Tuesday after a successful 2019 thus far, returning roughly 36% YTD. The group has benefitted over the years from strong performance of acquisitions, one of which being Nortek whose operating profit has soared since taking ownership. More recently in 2018 the company acquired GKN, one of the UK’s largest suppliers of car and aerospace components and this remains the focus for investors with the group’s ongoing plans to improve and streamline the business. After reassuring performance from interims in September, investors will be hoping that this positive momentum can continue.
We currently list Melrose as a BUY
The company has been reporting solid results in recent years and there isn't too much to suggest that this time around it will be any different. Increasing health and safety needs as well as the group's expansion into the emerging markets are driving revenues and earnings. At the last update, new contract awards were encouraging while the acquisition of Ampac was also welcomed. The company has been doing well so it trades at a relatively high P/E ratio, meaning half years earnings will have to be consistent to not disappoint the market.
We currently list Halma as a HOLD
Other companies reporting this day include: Telecom Plus Plc (Q2 2020 Earnings Release) – BUY
Breedon Group Plc (Q3 2019 Sales and Revenue Release – Trading Update)
AIM-listed Breedon provides various aggregates to the construction and building industry and with both main political parties talking about increasing government spending on infrastructure it could stand to benefit. The company’s products are used in a range of areas from road repairs to housebuilding. Growth in recent times has come as much through acquisitions as organically and the market will be interested to see what the contribution is from recent additions such as Hope Construction and Lagan. The shares are trading near their low for the year following the sale of an 8% stake by a major shareholder earlier in the month.
We currently list Breedon as a BUY
Kingfisher Plc (Q3 2020 Sales and Revenue Release - Trading Update)
The company’s interim results in September showed ongoing sales weakness in the French operations, which was no great surprise, but also a worse performance at B&Q in the UK and in Poland, which was not as expected. The market will be looking out for those figures in this third quarter update, as well as any full-year guidance and indications of what plans the new CEO Thierry Garnier may have for the company. With his background at French supermarket Carrefour there are hopes he can revive Kingfisher’s businesses across the Channel although they have defied repeated changes.
We currently list Kingfisher as a HOLD
The Sage Group Plc (Q4 2019 Earnings Release)
The last trading update wasn't that encouraging as the SSRS business sales fell faster than expected, but this business unit which sells software in the old fashioned way, no longer accounts for a large portion of sales as subscription based services over the cloud drives the company's fortunes. Guidance earlier in the year was for a full year operating margin of 23-25% after the Q3 numbers. There will be a lot of interest as to whether Sage has made any progress in the disposal of the Sage Pay unit.
We currently list Sage Group as a BUY
United Utilities Group Plc (Q2 2020 Earnings Release)
United Utilities is going through a period of change in what is a difficult market environment; focusing on a £1bn reduction in expenditure. Despite difficulties, the company feels it is relatively well placed with the dividend for the year rising to 41.28p back in its full year results in May. The update in September highlighted the group had performed in line with expectations and so investors will be hoping for more of the same next Thursday. However, the share price has become increasingly embroiled in political and regulatory volatility in recent times raising concerns over the defensive nature of the stock.
We currently list United Utilities as a BUY
Other companies reporting this day include: Direct Line (Trading Update) – we do not currently have a view on this stock
Centrica Plc (Q3 2019 Sales and Revenue Release – Trading Update)
Centrica has had a dismal run over the last three years being hit hard from the challenging market environment including price caps alongside lower oil and gas production which has resulted in shares now trading at all-time lows. Confidence in the group and management has depleted and dividend cuts have further exacerbated investor concerns. On a lighter note, the group’s shift towards a lower carbon future and refocusing its portfolio to more cost-competitive lines where it hopes to achieve £1bn in annualised efficiencies over the next three years should help provide investors some hope. Investors will likely be keeping their eyes peeled for any further news on these developments.
We currently list Centrica as a HOLD
Hill & Smith Holdings Plc (Q3 2019 Sales and Revenue Release – Trading Update)
The shares have recovered and underlying sales have marched forward since last summer’s disappointing half year results as infrastructure spending in various parts of the world pickup. It continues to perform well in the UK and US although will lookout for any impact on the business from the political uncertainties in the UK and the wider slowdown in the global economy. They will hope that some of the smaller geographies where they have experienced weakness in previous quarters have not persisted and that they can leave the full year guidance unchanged.
We currently list Hill & Smith as a BUY
Other companies reporting this day include: Severn Trent (Q2 2020 Earnings Release) – HOLD
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.