We give our thoughts on what to expect from companies announcing results week commencing 11 May 2020
Companies reporting w/c 11 May
Centrica Plc (Q1 2020 Sales and Revenue Release - Trading Update)
Life keeps getting tougher for the Group with falling oil prices lowering demand for power and expectations that bad debts are likely to rise all as a result of the current crisis. In April the Group reacted to the Coronavirus by suspending the final dividend and reducing cash expenditure, along with withdrawing guidance for the year ahead. Investors should not expect a return to dividend payments this year.
We currently list Centrica as a HOLD
Wm Morrison Supermarkets Plc (Q1 2020 Sales and Revenue Release - Trading Update)
The Group’s market share has recently fallen to 9.9%. However analysts have pointed to their smaller exposure to non-food and banking products than others in the sector have. Coronavirus has seen increased demand for food from supermarkets along with added costs. The defensive nature of the sector has come to the fore with the company’s share price rising slightly over the crisis. Any further news on the increase in online shopping and the delivery deal with Amazon will be worth noting.
We currently list Wm Morrison Supermarkets as a HOLD
Vodafone Group Plc (Q4 2020 Earnings Release)
These results will cover the period largely before the virus took hold globally therefore should be unaffected. They are expected to make a small build on the previous year's revenues and operating profits but reported profits should make a big leap into positive territory as write offs and impairments to the previous magnitude will not be repeated. However investor's focus will be on how it has been performing since the outbreak went global. In that regard it should prove relatively resilient from the consumer usage and demand point of view, but economies coming to a halt will hit revenues from businesses. Amid a raft of dividend cuts during the crisis and as a major dividend payer, its plans on future cash returns to shareholders will be eagerly awaited. However Vodafone has another headache to contend with in the form of the potential merger between Virgin Media and O2.
We currently list Vodafone Group as a BUY
Companies also reporting today include: Land Securities Group Plc (Q4 2020 Earnings Release) – HOLD
The Sage Group Plc (Q2 2020 Earnings Release)
In Sage's last update for the six months to March, the Group's guidance was ahead of expectations with organic recurring revenues continuing to show good momentum. Despite this it’s clear business operations were going to take a hit from the Coronavirus impact therefore investors will be keeping a close watch on the extent of this damage when they report Q2 earnings next week. The Group seemed to be well-positioned with a healthy balance sheet but investors will be hoping the online subscription services are still doing a good job at offsetting some of the weakness associated with the virus.
We currently list The Sage Group as a Buy
Spirax-Sarco Engineering Plc (Q1 2020 Sales and Revenue Release - Trading Update)
Spirax Sarco, best known for their steam systems and niche pumps, release a Q1 trading update next week. The Group has been in a period of consolidation over the last year or so. Annual results announced in March showed a fall in profits despite top-line revenue growth; however investors will have been pleased with the dividend increase. Despite this, they will be now most likely anticipating the progress of the company in light of the virus and will be looking for any update from the CEO in relation to the outlook – something he had previously stated concerned him.
We currently list Spirax-Sarco Engineering as a HOLD
Prudential Plc (Q1 2020 Sales and Revenue Release)
Prudential is now a largely Asian focussed life company and these results will reflect the economic shutdowns in those regions that happened earlier than in Europe or the US. Lower stock market valuations will certainly have a negative impact on fee income on assets it manages while the disruptions are likely to have put other things on consumers’ minds rather than making retirement plans and policies. Its US business will now be facing the same issues as America is shutdown too and investors will wonder how this affects its planned separations of the US business from the rest.
We currently list Prudential as a BUY
Companies reporting today include: Scottish Mortgage Investment Trust Plc (Q4 2020 Earnings Release) - HOLD
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