We give our thoughts on what to expect from companies announcing results week commencing 14 October 2019.
Companies reporting w/c 14 October
Marston’s (Q4 2019 Sales and Revenue Release - Trading Statement)
Having enjoyed a period of good growth, especially in its food-led pubs, the last update from Marston’s in July showed a weakening in sales in the previous 16 weeks. Investors will be watching to see if like-for-like sales remain positive, particularly at the destination and premium pubs. The company’s new focus on reducing its debt faster than previously expected and increasing its investment in its current state should help cash flow so investors will be looking out for any update on that.
We currently list Marston’s as a BUY
Rio Tinto (Q3 2019 Sales and Revenue Release – Operational Review)
The company had a good first half as its key commodity iron ore reached elevated levels following supply restrictions after the tragic dam accident in Brazil. However investors were warned by the management of the largest mining groups that they should expect iron ore prices to drift lower again during the second half of the year as supply constraints ease. The company will not want a repeat of the operational difficulties it experienced in the first half due to weather related factors, especially if commodity prices are set to fall due to increasing concerns regarding global economic growth.
We currently list Rio Tinto as a BUY
Other companies reporting this day include: Schroders (Trading update)
Segro (Trading update)
Results in July slightly disappointed the market and this has been reflected in the share price which has remained close to a two-year low. Macroeconomic uncertainty has not gone away and the shorter-term outlook for the group could be somewhat subdued. This global leader in packaging and paper involved in forestry through to the final products deserves to have a higher profile as a FTSE 100 constituent. Areas to focus on are costs, margins, and pricing of key paper grades.
We currently list Segro as a HOLD
Barratt Developments (Q1 2020 Sales and Revenue Release – Trading Update)
The UK housebuilding sector has performed well in recent years despite the uncertain economic and political environment. However, recent figures from Halifax showed house price growth at its slowest pace for six years. Full-year results from Barratt in September were largely in-line with market expectations, but the company said trading since 1 July had been slightly weaker so the market will be looking to see if that trend has continued into the new financial year. The level of forward sales and comments on the outlook for the year will be the main factors for investors to scrutinise. Any comments on dividends will also be watched closely as those have long been one of the main attractions of the sector.
We currently list Barratt Developments as a HOLD
BHP Group (Q1 2020 Sales and Revenue Release)
BHP had a good first half of 2019 as its key commodity iron ore reached elevated levels following supply restrictions after the tragic dam accident in Brazil. However, investors were warned by the management of the largest mining groups they should expect iron ore prices to drift lower again during the second half of the year as supply constraints ease. Investors will hope production in the latest quarter was not hampered by weather related operational difficulties while commentary from management may prove a useful indicator regarding the much talked about global economic slowdown especially in the manufacturing sector.
We currently list BHP as a HOLD
Unilever (Q3 2019 Sales and Revenue Release – Trading Statement)
As one of the world's largest consumer goods companies, it has recently won plaudits for its commitment to half the amount of virgin plastic used in its packaging by 2025, the hope from here would be action follows promises and it could spur others to follow in their path. We should all accept there will be additional costs to this but investors will question how much and will want some guidance from management in this regard. The last update showed poor weather did not help ice cream sales much, but that may have changed in Q3 with was dry and warm in Europe meanwhile investors should continue to expect emerging markets sales to continue at a good pace.
We currently list Unilever as a BUY
Rentokil Initial (Trading update)
The group best known for its pest control business has been doing well because of its renewed focus on what it does well: - pest control. It has been growing into the emerging markets with good organic growth, but recent acquisitions should also help. For business doing well with its share price at all-time highs trading near 30 times earnings, it is imperative the next update shows continued momentum. Investors though will keep an eye on the debt levels which has been trending higher due to acquisitions.
We currently list Rentokil as a HOLD
London Stock Exchange (Trading update)
With Hong Kong Exchanges and Clearing having pulled back from making a formal bid for LSE, investors’ attention will now switch back to how the company is performing in this third quarter update. The post trade business LCH Clearnet did well in the first half so it will again be a focus for investors. Brexit and economic uncertainty have reduced the number of IPOs on the London market this year, but it remains popular as a listing venue for many emerging markets companies. The market will also be interested in what progress is being made with the $27bn acquisition of a major stake in data group Refinitiv, which was announced in July.
We currently list London Stock Exchange as a HOLD
Other companies reporting this day include: InterContinental Hotels Group (Q3 2019 Sales and Revenue Release - Interim Management Statement) – 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.