We give our thoughts on what to expect from companies announcing results week commencing 21 October 2019.
Companies reporting w/c 21 October
Bunzl (Q3 2019 Earnings Release)
Reporting a slowdown in revenue growth over the first quarter ended the solid growth run for Bunzl over the 2018/19 period and placed pressure on the share price which fell approximately 22%. Despite a background of slowing macroeconomic conditions, interim results in August displayed resilient performance achieving 4.3% organic revenue growth. Looking ahead to next week’s trading update; shareholders will hope to see this theme continue to maintain the company’s long track record of consistent dividend increases. Furthermore with a committed acquisition pipeline, investors will hope cash flow conversion remains robust.
We currently list Bunzl as a BUY
St James’s Place (Q3 2019 Sales and Revenue Release)
Investors may be hoping in vain for better news in this third quarter update from the FTSE 100 wealth management firm given the uncertain macro-economic and political environment in the UK. That was the main reason behind some rather disappointing first half figures in July and the situation has not really changed since. While funds under management were up at that stage both the net inflow of funds and operating profit both fell back. The company said its clients' confidence towards investing might be subdued in the short term so investors will be interested in any update on that as well as any news on the key client retention rate.
We currently list St James’s Place as a BUY
Whitbread (Q2 2020 Earnings Release)
With the sale of its Costa cafe chain in 2018 Whitbread is now dominated by its Premier Inn business. After a long period of growth it has shown some signs of weakness this year which has led to a fall away in the shares. The last trading update in June reported a 1% fall in first quarter sales and the company was cautious on their short-term outlook for the UK. Investors will be looking out for any further signs of sustained weakness in the core UK operations, and also interested in the expansion plans in Germany progressing given the recent purchase of hotels.
We currently list Whitbread as a HOLD
Reckitt Benckiser Group (Q3 Sales and Revenue Release – Trading Update)
The owner of a number of well-known consumer brands like Dettol and Nurofen, lowered its revenue growth guidance for the year in July and the CEO said after a slower first half he expected some improvement in the second half. Investors will be looking for signs of that in these third quarter figures, especially in major emerging markets such as China where the performance has been mixed recently. In recent years the shares have been a little more volatile than normal so some reassuring news would be welcomed by investors.
We currently list Reckitt Benckiser as a HOLD
Other companies reporting this day include: Anglo American (Q3 2019 Sales and Revenue Release – Production Report) – HOLD
Companies reporting this day include: Antofagasta (Q3 2019 Sales and Revenue Release) – HOLD
AstraZeneca (Q3 2019 Earnings Release)
The Anglo-Swiss pharmaceutical giant has had a good few years as newer drugs sell very well and begin to more than offset the decline from some of its previous blockbusters that have lost exclusivity. The group's push into the emerging markets is also paying off, especially in China. It has also been in the news lately as more of its research portfolio has been receiving regulatory approval and justifying its recent all-time share prices highs. However, the sterling's recent strength and fears of a slowing global economy have halted its rally, nonetheless, investors will expect management to at least maintain their previous guidance for full year EPS of $3.50 to $3.70.
We currently list AstraZeneca as a BUY
Relx (Q3 2019 Sales and Revenue Release – Trading Update)
With the majority of the company’s restructuring over, RELX shareholders will hope the company can battle back against not meeting growth expectations in July for the first time in four years despite a 15% rise in net profit to £779m. The widening competitive environment and a change in the way academic research is being consumed is altering the market dynamic and therefore an emphasis may be cast on its academic journals business which accounts for roughly a third of earnings and was the primary driving force behind the revenue setback.
We currently list Relx as a BUY
RBS (Q3 3029 Earnings Release)
The group's shift back to UK based banking has seen the shares leap in recent weeks on the back of sterling's strength and the prospect of a resolution to the Brexit saga; however, its Q3 results will be a little premature in reflecting this and is likely to reflect some of the heightened uncertainty during the quarter. Investors will expect to hear of the end result of PPI claims where the deadline expired in August, meanwhile lower market interest rates will have hurt the net interest margin and the slowing economic environment is likely to have reflected upon lower credit demand.
We currently list RBS as a HOLD
Other companies reporting this day include: Evraz (Q3 2019 Sales and Revenue Release – Trading Update) – SELL
WPP (Q3 2019 Sales and Revenue Release – Trading Update)
Share prices in WPP have not had a smooth run over the last two years dropping to a six year low in February. Interim results showed revenues still struggling with a drop of 1.4% although this was less than expected. In a sector which has been disrupted by technology through powerhouses such as Google and Facebook, WPP has restructured in a bid to strengthen its balance sheet and simplify its cost structure. Investors will hope WPP can show signs of improvement in revenue growth in its trading update on Friday.
We currently list WPP as a HOLD
Barclays (Q3 2019 Earnings Release)
The latest mixed bag of numbers out of the big US banks won't shed too much light on Barclays investment banking performance while the pressure on its retail business isn't expected to change much. The group faces net interest margin compression while the ending of PPI claims should in theory be a relief, but investors should brace themselves for the surge in claims before the August deadline. Comments will also be sought around the impact of Brexit on business's demand for credit and signs of the global slowdown.
We currently list Barclays as a HOLD
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