We give our thoughts on what to expect from companies announcing results week commencing 13 January 2020.
Companies reporting w/c 13 January
Boohoo (Q3 2020 Sales and Revenue Release – Trading Update)
Shares in the online fashion retailer have performed very well over the past year, recovering quickly from a sale of shares by two of Boohoo’s founders in December. The company has consistently achieved strong growth in sales and profits, but there will be great interest in this trading update as it covers the all-important period from Black Friday to the run up to Christmas. In the company’s last update in December it said it expected full-year figures to be “comfortably in line” with forecasts, which include revenue growth of 33-38%, so any comment on that will be watched closely.
We currently list Boohoo as a BUY
Taylor Wimpey (Q4 2019 Sales and Revenue Release – Trading Statement)
The main housebuilders rose strongly in response to the general election result on hopes of a boost to the economy and increased demand for new homes. House prices have begun to grow again and the market will be interested to hear if Taylor Wimpey has seen much response yet in terms of more visits to its sites and completed sales. The last update showed higher sales volumes but also lower profit margins so investors will be keen to see if cost inflation is still expected to slow this year.
We currently list Taylor Wimpey as a HOLD
Persimmon (Q4 2019 Sales and Revenue Release – Trading Update)
Persimmon like many of the other major housebuilders have had a strong post-election run as Brexit fears were softened by the Tory majority. Investors will be interested to see if the company remains on track in its Q4 update after the company reduced profit margins earlier in the summer in order to improve the quality of its homes. Despite this, Persimmon still offer an impressive dividend yield relative to peers and benefits from a well-diversified portfolio of homes across the country, so it’s likely investors will be quietly confident for some positive news.
We currently list Persimmon as a HOLD
Associated British Foods (Q1 2020 Sales and Revenue Release - Trading Update)
The market will be interested in this first half update mainly to see how Primark performed in the run up to Christmas in the UK but also to hear about how its overseas expansion plans are developing. The company is opening stores in France and Spain but any comments about the US will also be noted. Like many others the shares got a boost from the general election result in December and investors will be keen to see if the company still expects earnings to grow in the current financial year thanks largely to better profits at the sugar and grocery businesses.
We currently list Associated British Foods as a HOLD
John Wood Group (Q4 2019 Sales and Revenue Release - Trading Update)
The shares in the energy services and infrastructure group have struggled since the announcement last year that the debt reduction programme will be slower than expected which is why this update for the year end debt levels will be crucial. It has taken measures to reduce debt including the planned disposal of its nuclear business although the proposed acquisition of this unit by Jacab's Inc of the US will now be scrutinised by the UK Competitions and Markets Authority. After two years of losses, analysts expect 2019 to have been a better year in terms of sales and profitability.
We currently list John Wood Group as a BUY
Whitbread (Q3 2020 Sales and Revenue Release – Trading Update)
Investors in Whitbread will be hoping to hear of better trading at its main business, Premier Inn, in the third quarter following the rather downbeat interim report in October. Sales at the budget hotel operation in the UK dropped 3.6% in the first half and the company said it expected the poor trading to continue in the second half. Investors will be looking for any signs of an improvement in sales outside London, which have been weak for some time. The performance of the Premier Inn business in Germany, which has been expanding, will also be of interest, as will any comment on full-year expectations.
We currently list Whitbread as a HOLD
Rio Tinto (Q4 2019 Sales and Revenue Release – Operational Review)
The major miners such as Rio have had a reasonably good few years as commodity prices in general have held up well with a much improved cost structure. Rio should experience another year of rising sales and operating profits so long as production in the final quarter did not experience too many adverse issues, which are expected. However, the resumption of production by rival Vale of Brazil is expected to put a downward pressure on iron ore prices and the market will want to hear how this has or will impact Q4 sales and beyond.
We currently list Rio Tinto as a BUY
The Gym Group (Q4 Trading Update)
Demand for low-cost flexible gyms has grown considerably in recent years; Gym Group has benefited from this trend seeing the opening of around 165 sites. Results in August showcased robust revenue and profit growth, with the company on track to open another 15-20 sites by the end of the year. Investors will be keen to see the group's progress on this looking ahead to their Q4 update next Friday. In addition, more competition is expected moving forward therefore it is important the Group push ahead and cement a leading position in this high-potential segment.
We currently list The Gym Group as a BUY
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