Graham Spooner, Investment Research Analyst at The Share Centre, gives his thoughts on what to expect from companies announcing results week commencing 7 August 2017:
Paddy Power Betfair (Interim results)
It's been a difficult year so far for Paddy Power Betfair. Full-year figures in March left some investors unimpressed with weaker trends seen in the final quarter of last year. First quarter figures then provided some relief as they indicated that the group had benefited from the weak pound and good trading at the Cheltenham festival. However, that was overshadowed by the news in June that the competition regulator is expanding its investigation into the online gambling sector, causing the shares to fall back.
We currently list Paddy Power Betfair as a HOLD
Other companies reporting today include: IWG (Q2 results) – BUY, Standard Life (Q2 results) – HOLD, InterContinental Hotels Group (Q2 results) – HOLD
G4S (Q2 results)
There has been a significant recovery in the share price since last August on the back of reassuring results and the market warming to management's restructuring. Investors will be concentrating on further improvements to efficiency, cost cutting and news on past lossmaking contracts. In an unsettled world the hope remains that demand for security work is unlikely to fall significantly.
We currently list G4S as a BUY
Legal & General (Q2 results)
The group has been reporting good underlying operation recently and there should be no real reason to expect any change here. Investors will lookout for the impact of the recent changes in the annuity market on the group numbers. New fund inflows and rising stock markets should see total assets getting closer or even breaching the £1tn level. It will be interesting to see if any comment around Brexit is made. Investors should note that solvency ratios should still be reasonable even after dividend pay-outs.
We currently list Legal & General as a HOLD
Prudential (Q2 results)
Shares in Prudential have staged a solid recovery on the back of a stronger economic backdrop in Asian economies. This is anticipated to show through in the group's latest half year results and follow through from last year's double digit growth levels. Investors should also expect the US market to continue to do well with retiring baby boomers. In the UK, premiums on life policies drove last year's performance while the M&G asset management business should see funds under management and inflows improve driven by a higher stock market. It should also report good solvency ratios that are above its peer's averages.
We currently list Prudential as a BUY
TUI (Q3 results)
Global tourism group TUI had a good first half and the market will be interested to see if hotel and cruise bookings remain strong. There has been a trend for holidaymakers to move away from Turkey and North Africa and more towards the Western Mediterranean and Caribbean. Investors will also be watching to see if the previous guidance for a rise in full year earnings of at least 10% remains in place. There have been rumours that the group is once again talking to Air Berlin and Etihad about setting up a leisure-orientated airline.
We currently list TUI as a BUY
Cineworld (Q2 results)
A steady stream of blockbuster films has helped drive growth at cinema operator Cineworld, and there are more films scheduled for the second half of the year including the latest in the Star Wars series. Investors will be looking to see the level of sales in the growing Eastern European operations, as well as any further news on the expansion plans there. Retail sales are increasingly important from the various outlets at the cinema sites and the strength of the balance sheet has fuelled speculation about further acquisitions or enhanced dividends.
We currently list Cineworld as a BUY
Other companies reporting today include: Hill & Smith (Q2 results) – BUY, Coca-Cola HBC (Q2 results) – HOLD, Glencore (Q2 results) – HOLD
Companies reporting today: Old Mutual (Q2 results) – HOLD
Announcements w/c 7 August:
10 August, UK Index of Production, June, Construction output in Great Britain and new orders, April to June 2017 and UK Trade, June 2017 – Office for National Statistics
In May, UK industrial production contracted by 0.1% month on month, while manufacturing saw a 0.2% contraction. Construction was down 1.2% month on month, creating a somewhat downbeat set of figures. The trade deficit widened as well to £3.1bn, but the three month growth rate on export orders was up 3.3% on the month before. However, purchasing managers' indexes tracking manufacturing in June have told a more promising tale, while they also indicated an improvement in exports. Will today's data reflect this?
11 August, US consumer price index, July – Bureau of Labor Statistics
US Inflation has been falling rapidly, undermining the need for higher interest rates in the US. In June, the headline rate was down to 1.6%, core inflation – excluding food and energy – was 1.7%. Will US inflation continue to be weak in July and if so, might this shake the resolve of the US Federal Reserve to continue on its course of rising interest rates?
• Residential Market Survey, July – Royal Institute of Chartered Surveyors