Results round-up: Companies to watch this week
Monday 19 May
Ryanair – half-year results
The low cost airline’s stock rose today after reporting a one per cent increase in profits for the first half of this year as its traffic grew two per cent. Looking forward, it expects increased profit and traffic for the fiscal year 2015. You can read its full results here.
Babcock International – full-year results
The engineering support services group reported a nine per cent rise in revenue and operating profit in its full-year results. A full year dividend rise of 13 per cent just beat industry expectations of around 10 per cent. Investors should pay attention to progress on the Avincis transaction and on recent major contract wins including the London Fire Brigade, the Nuclear Decommissioning Authority and Network Rail.
Tuesday 20 May
Marks & Spencer – full-year results
Marks & Spencer is expected to report subdued sales growth, a largely flat operating margin and lower interest charge in its full-year results. When the company last updated the market, it reported that general merchandise was down by 0.6 per cent and food sales were up by 0.1 per cent. The share price fell by 3 per cent on the statement but has since bounced back. Market expectations are for 3 per cent dividend growth. Investors should pay attention to the profit margin and financial guidance for the 2014/15 financial year.
Vodafone- full-year results
Analysts expect the telecom operator to announce flat sales, a slightly lower margin and marginally higher interest rate. Worsening performance in Europe in the third quarter knocked underlying revenue by nearly 10 per cent, so investors should keep an eye on trends and expectations for the region. They should also be aware of any news on the early stages of the Project Spring extra investment plan and guidance of the current year. Dividend growth is expected to be around 2.5 per cent for the current year.
Wednesday 21 May
Burberry – full-year results
The luxury fashion house is expected to announce strong growth along with its full-year results on Wednesday after its last update in April revealed that sales were up by 12 per cent in the six months to March. Analysts expect a dividend growth of 10 per cent, predicated on healthy sales growth, a slightly higher operating margin and unchanged interest charge.
Investors should focus on operating margin and outlook comments for 2014/15 as incoming chief executive Christopher Bailey takes the reins. Burberry’s stock price indicates that investors expect demand for luxury goods to remain buoyant.
SSE – full-year results
SSE’s stock price has remained fairly stable amid turmoil in the UK energy market. In March the company reiterated expectations for a two to four per cent rise in earnings in 2014 and said that profit would be flat or slightly higher in 2015, despite a pledge to freeze household energy prices.
Investors should pay attention to customer numbers and household demand, updates on the company’s £1.5bn capital expenditure programme and plans for debt reduction and cost cutting.
Thursday 22 May
Royal Mail – full-year results
Royal Mail is expected to announce a dividend increase of about 50 per cent in the new financial year, reflecting its listing for a full year. Investors will be on the lookout for updates on the competitive environment of the postal market as they debate whether the Royal Mail’s parcel growth and cost efficiencies can outweigh threats from competitors and e-substitution.
SABMiller – full-year results
The brewer will update the market with its full-year results following a solid fourth-quarter trading update in April. Market expectations are for five per cent dividend growth this year and a slightly higher operating margin. Outlook comments and financial guidance for the current year will interest investors, though the share price indicates that investors expect demand for beer in emerging markets will remain relatively resilient over the medium term.
United Utilities – full-year results
The water company is expected to announce that both profits and sales have gone up since last year. Dividend growth is expected at five per cent for the year, in line with the company’s commitment to growth of two per cent above RPI inflation each year until 2015.
Investors will be eagerly awaiting updates on the company’s operational performance, delivery of the accelerated capital expenditure programme and its preparations for submission of their 2015-2020 business plans to the regulator for review on 27 June.
Friday 23 May
Smiths Group – third-quarter trading update
This diversified engineering firm’s half-year results fell short of expectations thanks to tough healthcare and defence markets. Performance is expected to improve in the second half of the year, though currency headwinds are working against Smiths. The market expects dividend growth of 8 per cent this year based on moderately lower sales, a slightly weaker margin and solid cash generation.
Investors will be focusing on the company’s group-wide restructuring programme and investments that may drive growth: research and development, acquisitions and expansion in emerging markets.
Source: Charles Stanley