We give our thoughts on what to expect from companies announcing results week commencing 3 February 2020.
Companies reporting w/c 3 February
Porvair Plc (Q4 2019 Earnings Release)
Porvair’s share price has had a robust start to 2020 rising over 15% already with the company releasing a strong trading update in December. It will also be interesting to get an update on how the company’s acquisition of the Dahlman Group, based in the Netherlands is getting on with stricter emissions regulations expected in the future.
We currently list Porvair as a BUY
St Mowden Properties Plc (Q4 2019 Earnings Release)
The group is best known in the regeneration of brownfield sites. St Modwen has continued to benefit from growth in its two key areas, regional housebuilding and commercial property in industrials & logistics. The share price has recovered close to three year highs helped by Brexit news and the election result.
We currently list St Mowden Properties as a BUY
BP Plc (Q4 2019 Earnings Release)
There are expectations that the production improvements we saw in earlier quarters can be repeated in Q4 and therefore lift overall 2019 production levels as new facilities and projects came online. However, lower oil prices could once again offset any production gains on the revenue line. Investors will expect to see synergies and diversification benefits from the shale asset acquisition from BHP while the attractive dividends should be maintained. Some focus will be on the gearing ratio, which last stood at 31.7% as debt rose due to the acquisition, sitting higher than their target levels.
We currently list BP as a BUY
Barratt Developments Plc (Q2 2020 Earnings Release)
As with many of its peers Barratt looks to be in a better position following the General Election result and the removal of a lot of political uncertainty. While Brexit continues to hang over the economy investors are once again more focused on the strong fundamentals for the sector and favourable trading conditions. Much of that is already priced into the shares but the market will be interested to hear whether average selling prices have increased and if there has been a rise in activity since the election. Barratt said previously that it expects volume growth of new houses to be towards the lower end of its medium term 3-5% range, so any update on that will also be a focus for investors.
We currently list Barratt Developments as a HOLD
Vodafone Group Plc (Q3 2020 Sales and Revenue Release – Trading Update)
A week ahead of the third quarter results the group announced details of an agreement with the Saudi Telecom Company to sell a 55% shareholding in its Egyptian business for $2.4bn. Investors will welcome this as part of the new management teams restructuring, they will also expect a progress update on plans to separate off the European portfolio of mobile towers. With these group restructurings, investors will hope to see more evidence of a turnaround in the group's fortunes after their big dividend cut last year. There is hope that service revenues in parts of Europe and South Africa and pick up again.
We currently list Vodafone as a HOLD
GlaxoSmithKline Plc (Q4 2019 Earnings Release)
Recent years have been good for the pharmaceutical giant following a period of heavy investment into R&D to counter the patent cliff and generic competition. New drug sales increased by 87% at the third quarter stage but the hope is that the full year sales growth could have been maintained closer to 100%. There has been a fair amount of M&A activity from the group and combined with strong sale for new drugs, investors will hope the group can manage to meet the upgraded forecast of at least achieving flat adjusted EPS rather than the previous 3-5% fall.
We currently list GlaxoSmithKline as a BUY
Smurfitt Kappa (Finals)
Smurfit Kappa is a company well positioned to benefit from structural drivers such as the rise of e-commerce and the backlash against plastic packaging. The group's continued focus on ESG solutions and the rise of online shopping has helped guide the company over 2019 returning roughly 24% to shareholders. Investors will be hoping this momentum can continue heading into the new year following a strong trading update for the first nine months of 2019 which showed good corrugated box organic growth and EBITDA growth ahead of targets. Prospects of a takeover also remain.
We currently list Smurfitt Kappa as a BUY
Compass Group Plc (Q1 2020 Sales and Revenue Release – Trading Update)
Compass has benefitted from the long-running global trend to outsource catering services, and investors have liked the defensive nature of the sector with steady cash flows providing some certainty. In this first quarter update the market will be watching out for the performance in the key North American region, which has been strong for some time. Any comments on Europe will also be scrutinised closely as there was deterioration there last year. Investors will be also be interested in how the efforts to reduce costs are progressing and whether the company still expects no progress with profit margins this year.
We currently list Compass as a BUY
Tate & Lyle Plc (Q3 2020 Sales and Revenue Release – Trading Statement)
The group operates through two divisions, Primary Products (predominantly North America) and Food and Beverage Solutions (food ingredients, including Sucralose) and produces corn syrup sweeteners used by soft drink manufacturers, liquid sweeteners, starch, ethanol and other products. Last year the CEO highlighted "real momentum" in his business plan and that cost control has helped offset higher input costs. With the share price touching a five-year high, investors will be looking for further evidence that momentum has continued.
We currently list Tate & Lyle as a BUY
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