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The week ahead...
By Patrick Smith | Fri, 1st February 2013 - 18:03
There's plenty to keep investors interested over the coming days, with 888, GlaxoSmithKline and Supergroup among a variety of firms reporting.
Monday 4 February
Online gambling firm 888 Holdings (888) will release its key performance indicators on Monday.
Recent news: At its pre-close trading update 888 announced that trading continued to be strong across the group and it remained confident of meeting management expectations for full-year clean EBITDA. This was a reassuring update that confirms the business is in good shape for 2013.
Analysts' expectations: Panmure Gordon's team comment: "We estimate $96.1 million (£60.7 million) revenue in the fourth quarter, up 5.5% year-on-year. We forecast 3% profit growth in 2013 to $68.5 million.
"We reiterate our 'buy' recommendation and 143p target price implying 25% potential upside."
Valuation: The stock trades on a 2013 enterprise value/EBITDA of 7.8 times, broadly in line with the gaming sector average.
Randgold Resources, Torchmark Corporation, Creston.
Namakwa Diamonds, Future.
Tuesday 5 February
While Tuesday will be quiet on the corporate front, British Retail Consortium (BRC) retail sales figures and services purchasing managers' index (PMI) data will be released.
There has been a distinct weakening in high street spending over the past few months, with the Office of National Statistics measure of retail sales dropping back by 0.6% over the fourth quarter as a whole, while the BRC survey has shown annual like-for-like sales value growth heading towards zero.
Investec economist Philip Shaw says: "In short we do not think that last month's numbers were depressed by 'tough comps' and we see no 'technical' reasons for a January rebound. We are expecting like-for-like sales growth to have fallen further, most probably into negative territory, with our forecast at -0.5%."
In December, the British services PMI fell to 48.9, indicating a modest contraction in service sector activity at the end of last year and taking the index to its lowest level since the depths of the financial crisis in April 2009.
Victoria Clarke of Investec comments: "We expect to see a bounce back of sorts in the UK PMI, with it climbing to 49.5, getting closer to but still standing short of the 'breakeven' point."
ARM Holdings, Allocate Software, BP, St Modwen Properties, Low & Bonar, BG Group, Victrex, TalkTalk Telecom, Qinetiq.
Dewhurst, Numis Corporation, Albion Income & Growth, Victrex.
Wednesday 6 February
Investors will be hoping GlaxoSmithKline (GSK) has capitalised on better tailwinds for the sector in recent times as it reports its fourth-quarter results.
Analysts' expectations: "Given Glaxo's operating leverage on the relatively early and proportionally strong flu season, we can expect decent results from the company," comments Panmure Gordon analyst Savvas Neophytou.
"More importantly the company should provide the market with a robust outlook unlike many of its peers. We remain buyers."
He forecasts revenues of £7.1 billion, pre-tax profit of £2.1 billion and adjusted earnings per share of 29p.
Valuation: The stock is trading at 12.5 times for 2013 and 11.5 times for 2014 price/earnings ratios. Although not the cheapest, the company has been through the majority of its patent expiries, big liability settlements and boasts a strong balance sheet.
WS Atkins (ATK) will be hoping to give its share price a boost with its interim management statement on Wednesday.
Recent news: First-half results in November were in-line with expectations despite a challenging six months in its North American and Middle Eastern operations. There was a good performance from its Energy and Asia Pacific & European operations, while the UK was solid helped by success at the London Olympics.
Analysts' expectations: Andy Brown of Panmure Gordon comments: "The share price has endured a bumpy relative ride in the past 12 months although in absolute terms it is near to a two-year high. First-half results calmed nerves and it entered the second with healthy work in hand along with higher headcount. Longer-term attractions remain but for now the shares look up with events so we are neutral."
Valuation: The 2013 price/earnings (P/E) ratio is 10.5 times, which is broadly in-line with its UK peers on 10 times.
Daily Mail and General Trust, Quintain Estates & Development, Eurasian Natural Resources Corporation, easyJet, WS Atkins, Hargreaves Lansdown, Canaccord Financial, Smurfit Kappa Group, New Europe Property Investments, Wolfson Microelectronics.
LED International Holdings, Redhall Group.
Thursday 7 February
Thursday will be a bumper day for corporate news, with everyone from Supergroup to Compass Group reporting.
Bellway (BWY) will unveil its interim management statement, in which it is expected to confirm its 2013 targets.
Recent news: The most recent trading at the housebuilder was good, with reservations up 6% and average selling prices up 4%. Margins have also progressed recently and are running ahead of the 12.5% reported last year.
Analysts' expectations: "We forecast a 4.3% increase in volume growth in 2013. Net margins should continue to improve at the group (we forecast a 180 basis point (bps) improvement to 13.2%). We therefore forecast July 2013 pre-tax profit of £126.4 million (20% up year-on-year)," predict analysts at Panmure Gordon.
"The group should continue to see solid profitability against the backdrop of stagnant market conditions but this is the case throughout the sector and with the shares trading on a December 2013 price to net asset value premium the valuation looks up with events to us for now. We therefore maintain our 'hold' recommendation."
Next up is Compass Group (CPG), also with its interim management statement.
Recent news: Compass announced full-year 2012 results in line with expectations, reporting £1.1 billion in pre-tax profit, exactly in line with forecasts. The full-year dividend increased 10% to 21.3p, in line with expectations. It has committed to returning another £400 million to shareholders via a share buyback over the next 12 months.
Analysts' expectations: Simon French at Panmure Gordon says: "We forecast 4.5% organic growth in 2013. At the prelims, management stated the future prospects of the group remain encouraging and it was confident of delivery against market expectations in 2013.
"For 2013 we forecast £1,188 million pre-tax profit, slightly ahead of consensus forecasts of £1,167 million pre-tax profit."
Valuation: The stock trades on a 2013 P/E ratio of 16.5 times, supported by a yield of 3%.
McBride (MCB) will reveal its first-half results on Thursday 7 February.
Recent news: The household products company's pre-close statement indicated that its first-half performance was negatively impacted by a reduced level of toll manufacturing revenues, resulting in constant currency revenues declining by 6%.
Analysts' expectations: "Following the planned exit from a number of toll manufacturing agreements we forecast that first revenues will be 11% lower at £375 million but expect adjusted operating profit to rise 12% to £11.5 million, reflecting the improved underlying margin structure of the business."
Valuation: The shares continue to trade at an 18% discount to its peer group on 5.6 times enterprise value/EBITDA ration for 2013.
And finally for Thursday, Supergroup (SGP) with its third-quarter trading update.
Analysts' expectations: "Supergroup can look forward to much softer comparables in the second half. The fourth quarter in particular has a flat retail like-for-like comparable and 4.4% growth in wholesale revenues. We forecast third-quarter revenue growth of 16.3%.
"We think margin guidance may have some upside and to this end we have nudged our second-half gross margin forecast up: we now see +60 bps versus -20bps previously."
Valuation: Supergroup shares trade on a 2013 P/E ratio of 11.8 times, dropping to 10.3 times in 2014, compared with UK apparel and homewares retail peers on an average of 15.1 times and 13.6 times.
November's manufacturing figures were a nasty surprise, posting a 0.3% decline on the month, frustrating expectations of a rebound, following a published slump of 1.3% in October. Investors will be hoping that December's figures will show an improvement.
Philip Shaw of Investec comments: "Overall we hope to be looking forward to a modest revival of the manufacturing sector over 2013, following what looks like a 2% contraction last year. However the sector will have its hands tied behind its back until the eurozone economy begins to show a recovery, most likely during the second half of this year."
TUI Travel, Beazley, Smith & Nephew, Ocado Group, Amino Technologies, ICAP, Vodafone Group, Avon Rubber.
Thomas Cook Group, Hotel Corporation, TUI Travel, Paragon Group of Companies, Unicorn Aim, Avon Rubber, Compass Group, Downing Absolute Income.
Friday 8 February
Friday will once again prove a quiet one on both the economic and corporate front.
Workspace Group, Shaftesbury, Aquarius Platinum, Catlin Group.
|COMPASS GROUP PLC ORD 10 5/8P||1,035.00p||1.17%|
|GLAXOSMITHKLINE PLC ORD 25P||1,340.50p||0.71%|
|ATKINS (WS) PLC ORD 0.5P||1,468.00p||0.34%|
|BELLWAY PLC ORD 12.5P||2,489.00p||2.09%|
|SUPERGROUP PLC ORD 5P||1,467.00p||1.73%|
|888 HOLDINGS PLC ORD 0.5P||162.75p||0.77%|
|MCBRIDE PLC ORD 10P||118.00p||0.00%|
|All data 15min delayed as of: 02:33:10 30/08/15|