We give our thoughts on what to expect from companies announcing results week commencing 4 November 2019.
Companies reporting w/c 4 November
Companies reporting this day include: Hiscox (Q3 2019 Sales and Revenue Release) – HOLD
Associated British Foods Plc (Q4 2019 Earnings Release)
Given the trading update issued by the company only a few weeks ago there shouldn’t be much in the way of surprises on sales in these full-year figures. The focus for investors will be to what extent the profits at Primark and the grocery businesses are offset by an expected drop at the sugar business. Sales at Primark are forecast to be up 4% for the year to September, although like-for-like sales are expected to be down 2%. The market will be looking especially at the performance in the US, which has been good recently and where there are hopes for further expansion. Any guidance on profit margins in the new financial year will also be of interest given the warning from the company in September.
We currently list Associated British Foods as a HOLD
Imperial Brands (Q4 2019 Earnings Release)
An indicative 11% dividend yield does not provide much comfort for medium to long term holders of the shares where prices have more than halved since 2016, worse than the sector average which is nothing to shout about either. For a while it seemed that transitioning to e-cigarettes would be the company's future, but slow uptake and regulatory controls have dampened those expectations. If the latest September profit warning is anything to go by, then investors should expect sales growth of 2% with flat earnings growth.
We currently list Imperial Brands as a HOLD
Wm Morrison Supermarkets Plc (Q3 2020 Sales and Revenue Release)
The UK’s fourth biggest supermarket has faced a difficult few years with discount retailers stepping onto the scene resulting in a lower market share. However, Morrisons has been making changes to the business including the expansion of its existing relationship with Amazon delivery into new cities and improvement of its wholesale supply initiatives. Investors will hope these structural changes can feed down to the bottom line amidst a highly competitive environment. Investors will also likely be keeping an eye on the businesses debt levels which have increased over the last couple of months.
We currently list Wm Morrison as a HOLD
Marks & Spencer Group Plc (Q2 2020 Earnings Release)
Fair to say M&S doesn’t have its troubles to seek at the moment. Dropping out of the FTSE 100 index in September was a big moment given the company had been a member since 1984. Losing the finance chief and the head of the struggling homeware and clothing department has not helped to restore confidence. In these interim results investors will be watching out for comments on the performance of the food business and also how long the company expects its efforts to rejuvenate the clothing business to take given comments by the CEO Steve Rowe a few weeks ago which suggested it could be a 2-4 year timeframe.
We currently do not have a view on this stock
Persimmon Plc (Q3 2019 Sales and Revenue Release – Trading Update)
Shares in the housebuilding sector in particular have done well in recent weeks as the dreaded no-deal Brexit scenario seems to have been averted with the expectation that reduced uncertainties will result in greater confidence in home buying. Despite these concerns, housebuilders have generally done well with volumes remaining flat or seeing modest rises and still making good profits. However, with Persimmon there is more focus on the quality of the homes they have produced and the expect rise in costs to remedy bad construction. Investors may also focus on the rising in labour and material costs which will drag on margins.
We currently list Persimmon as a HOLD
J Sainsbury Plc (Q2 2020 Earnings Release)
Sainsbury broke a 20-year price low earlier this year prompting further pressure on CEO Mike Coupe to come up with a recovery plan. Sainsbury is yet another example of a well renowned business being hit by disruptive business models. Intense competition from discount retailers has placed pressure on growth prospects with same store sales forecast to continue on a negative trajectory for the rest of the year. However, improvements in grocery areas and pricing will provide some scope for optimism for investors looking ahead at results next week.
We currently list Sainsbury as a HOLD
Tate & Lyle Plc (Q2 2020 Earnings Release)
Tate & Lyle investors will be looking for signs of improvement following some of the major structural change initiatives the business has undertaken. Improved cost control has helped offset higher input costs which may filter into higher margins particularly in the companies Food & Beverage division. This company remains fundamentally strong with a good debt structure, improving free cash flow margins and a solid dividend yield so investors will be looking for signs of this to be maintained.
We currently list Tate & Lyle as a BUY
Auto Trader (Q2 2020 Earnings Release)
Auto Trader’s shares have had a volatile year but have still outperformed the FTSE 100 index. The company has benefited from the trend for people to trade in their cars for a second-hand model on a fairly regular basis and came in to the blue chip index last December after steady growth over a number of years. Full-year figures in June showed further solid growth in profits although the company warned average revenue per retailer was likely to slow down in the current financial year. Investors will therefore be watching out for signs of that and any update on guidance.
We currently list Auto Trader as a HOLD
Hikma (Trading Update)
The Middle Eastern and North American focussed generics and unbranded medicines manufacturer has done well lately with the share price not far off from the highs seen in 2016 and seemingly over the troubled period the group had soon after. The half year revenues rose by 7% while the operating profits jumped by 37% after which the management upgraded their full year expectations. So new product launches and the progress in the R&D portfolio is expected to continue, but one disappointment was the delays in the approval of a generic version of Advair for which investors will eagerly wait for an update on.
We currently list Hikma as a BUY
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.