We give our thoughts on what to expect from companies announcing results week commencing 20 April 2020.
Companies reporting w/c 20 April
Associated British Foods Plc (Q2 2020 Earnings Release)
ABF’s largest business is value fashion chain Primark but given that all of its stores have been closed since March investors will be keen for an update in these interim results on how successful the conglomerate has been so far with the mitigating action it is taking to recover some of Primark’s costs. The group has benefited so far from the varied sectors that it serves, ranging from sugar to food ingredients and agriculture. Thy have not yet been impacted by Covid-19 but the market will be interested to see if that remains the case and will be looking for more detail on the company’s statement earlier in the month that earnings this year will be “much lower” than expected at the start of the year.
We currently list ABF as a HOLD
London Stock Exchange Group Plc (Q1 2020 Sales and Revenue Release)
The turbulence in markets as a result of the coronavirus has increased dealing activity significantly. Investors in the company will be keen to hear how the LSE has been affected across the various businesses they are involved in, as well as the measures management have taken. The shares have held up relatively well benefitting from the groups increased diversification which has been viewed as a positive.
We currently list LSE Group as a HOLD
SEGRO Plc (Q1 2020 Sales and Revenue Release)
The shares have held up reasonably well considering the wider market falls and this reflects the type of assets the group holds, mostly warehouses for retail groups offering online deliveries. However, any update from the group is likely to show a mixed picture with demand in the economy in general slumping possibly requiring fewer storage spaces in the short to medium term and some customers asking for a rent reduction while some online retailers will have done exceptionally well and possibly needing more space.
We currently list SEGRO as a HOLD
CRH Plc (Q1 2020 Sales and Revenue Release)
Building materials group profitability is strongly linked to the health of the global economy, in particular the US and European housing and construction activity. The group has a strong balance sheet with good cash generation, which in these troubled times will be viewed as a positive. As with most updates the coronavirus will be all that investors will be concentrating on.
We currently list CRH as a BUY
Boohoo Group Plc (Q4 2020 Earnings Release)
Despite falling along with the market in March, shares have bounced back strongly since. In fact, they’ve outperformed both the market and rival ASOS so far this year. The main reason is the company enjoyed record sales over Christmas and in January forecast full-year revenue growth of a remarkable 40-42%. It is likely the company has been less affected so far by the Covid-19 lockdown than the high street clothing retailers, but investors will be keen to hear what expectations are for the new financial year. The market will also be looking to see if overseas growth continues to outstrip the UK and whether profit margins remain stable.
We currently list Boohoo as a BUY
Taylor Wimpey Plc (Q1 2020 Sales and Revenue Release)
The company has taken fairly drastic measures during the virus outbreak by shutting all of its constructions sites and sales offices and slashed costs to preserve cash. We may get the full quarterly trading update due to the moratorium but if there is any reporting on the first quarter then it’s likely to show that trading up until the outbreak in Europe was reasonably robust with a solid order book. However the outlook will be all-important and investors will be bracing themselves for the lack of confidence in the economy and job cuts to hit upon buyer footfall and interest in moving home once the lockdown is lifted.
We currently list Taylor Wimpey as a HOLD
Unilever Plc (Q1 2020 Sales and Revenue Release)
The defensive nature of Unilever’s business, selling many everyday items across many regions, is really helping it to weather the current market and economic turbulence very well. The shares have comfortably outperformed the market and, in contrast to many other FTSE 100 companies, the market expects it to raise its dividends by around 9% this year. In these first quarter numbers the market will be looking to see if the slowdown in South Asia has continued and whether the company still expects to achieve sales growth at the lower end of the 3-5% target range it gave previously. Any news on the progress of the tea business review will also be of interest.
We currently list Unilever as a BUY
Meggitt Plc (Q1 2020 Sales and Revenue Release)
Meggitt continue to be held back by their exposure to the commercial aviation industry resulting in a decrease of demand for equipment and aftermarket services. Investors will be hoping the withdrawal of the final dividend alongside other cost-cutting measures would have helped add to their strong financial position but will be eagerly awaiting any further updates on the extent of the virus impact in Q1.
We currently list Meggitt as a HOLD
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