We give our thoughts on what to expect from companies announcing results week commencing 7th December 2020.
Companies reporting w/c 7 December
Ashtead Group Plc: Q2 2021 Earnings Release
Ashtead’s shares have performed very well this year, comfortably ahead of the market and more than doubling from their low in March. The equipment hire group has benefitted from being categorised as an essential business during the lockdowns, which has meant it has continued to perform relatively well. Investors will be watching cash flow levels, which have been good so far and have enabled the Company to raise its dividends this year. Any guidance on full year expectations will be of interest given hopes that major infrastructure projects will receive a boost in both the UK and the US in the near future.
Ferguson Plc: Q1 2021 Sales and Revenue Release – Interim Management Statement
Ferguson is the world’s largest distributor of plumbing and heating products. The focus remains on improving customer service, organic revenue growth, margin expansion, cost control and cash generation. The Company is highly geared towards the US, where the majority of revenue and trading profits are generated. Bulls of the stock are hoping that the strong balance sheet, cost-cutting, a more defensive revenue mix and a larger market share will help support the share price, which has recently hit an all-time high. Any update on its proposed demerger of its UK operations will be worth noting.
British American Tobacco: Trading Update
BAT’s defensive qualities and regular dividends usually make it very appealing to investors at times of great economic uncertainty. However, the shares have slightly underperformed the market so far this year due to concerns about increasing levels of regulation in some markets, especially for some next generation products which are seen as vital in order to make up for the long term decline in sales of traditional cigarettes. BAT’s next generation product sales grew 13% in the first half, and the market will be keen to see if that continued in the second half despite the continued Covid-19 restrictions.
Marston’s Plc: Q4 2020 Earnings Release
The pub and restaurant group's full year result will only capture just over six months’ worth of the effect on the global pandemic and lockdowns in the UK. However, the update ahead of this publication showed that trading during this period had been ahead of expectations from the surge in pent-up demand and supported by the government's Eat Out to Help Out programme. That said, as we emerge from the UK’s second national lockdown in November, the focus will fall on the outlook over the short term and how difficult the past month may have made the Company's plans on cutting back on its relatively high debt level.
Ocado Group Plc: Q4 2020 Sales and Revenue Release – Trading Statement
Ocado has been one of the big winners in retail-connected sectors this year, thanks to a surge in the volume of home grocery deliveries during the pandemic. The last update was only a few weeks ago so there shouldn’t be too many surprises in this fourth quarter trading statement. Investors will be looking to see if revenues for the joint venture with Marks & Spencer have picked up during the latest lockdown and what the prospects are for next year as the vaccine is rolled out and possibly restrictions are eased. The Company’s full-year earnings guidance has risen steadily this year, up to £60m in the last update in early November. The Company has also acquired a US robotics firm, which will give it access to markets beyond groceries.
DS Smith Plc: Q2 2021 Earnings Release
Packaging group DS Smith has had a mixed year with increased demand for its products from e-commerce companies offset by extra costs due to disruption caused by the pandemic. These interims results are expected to show profits lower than last year although the Company is still due to declare a dividend. A new sustainability strategy aimed at increasing the amount of recycled packaging and reducing waste was announced earlier in the year. However, in this update the market will mostly focus on any comments about the level of demand the Company has seen so far for its corrugated boxes from online retailers in the crucial Christmas trading period.
Rolls Royce: Trading Update
Rolls Royce have evidently suffered this year due to a grounding of global aircraft on which it relies for a substantial part of its revenue base. The Group conducted a rights issue earlier in the year and have generally been looking for ways to support the large cash burn they have faced since the initial lockdown. Nevertheless, positive news surrounding a vaccine in the last month has helped the share price recover as a glimmer of hope for air travel returned. It is clear from the rights issue that investors are not losing faith and will be hoping for some brighter news next week as the Company continues to navigate their way through one of the biggest restructurings in their history.
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