The Forward Look
Sheridan Admans, investment research manager at The Share Centre, gives his thoughts on what to expect from companies announcing results w/c 9 January 2012.
Companies reporting today include Morrison's (trading Statement) – HOLD
Marks & Spencer (Q3 interim results)
- 1 Norfolk deli owner suffers severe spinal injuries in Ibiza diving accident
- 2 Revealed: Where dangerous parasite has been reported in Norfolk
- 3 Possible foot and mouth disease case investigated at pig farm
- 4 Driver died in crash with tractor after misjudging corner on rural road
- 5 Care home which has sat empty for four years to be revived by new owners
- 6 Train evacuated after hitting horse on Norwich to Diss line
- 7 Highways bosses reveal when A47 dualling work will start
- 8 7 dogs looking for new homes in Norfolk
- 9 Traffic delays after car plunges into underpass in Yarmouth
- 10 Man sexually assaulted and raped woman who fell asleep
We expect this interim statement to show the company's food sales and overseas strategy is continuing to progress well.
An unseasonably warm autumn may have affected revenues in the last quarter. The high expectation of a poor turnout on the high street during the festive season will also have impacted clothing sales.
Marks & Spencer has a strong reputation in the UK for high quality produce at good value. This reputation should pay dividends at this time of austerity when people will be more conscious of their discretionary spending.
We currently list Marks & Spencer as a BUY
Other companies reporting today include Howden Joinery (trading statement) – HOLD, Smiths News (interim management statement) - BUY
Sainsbury (Q3 interim results)
We expect these results to be uninspiring for investors. Like many UK centric retailers, we expect Sainsbury to have found trading conditions tough in the run up to the festive period. We suspect the Gok Wan headline incentive launched earlier in the year to have had a mixed response, as competitors have sought to retain and attract customers with various strategies in these challenging times.
Like many of its competitors Sainsbury has offered discounts, incentives and competitive pricing in an effort to increase footfall. This is likely to have led to larger volumes sold, but limited revenue growth.
We currently list Sainsbury as a HOLD
Ashmore (trading update)
Fund management groups have been under pressure of late, as continued uncertainty has seen investors taking money out of the market. Followers of the group will be keen to hear if emerging markets are proving more resilient than its European rivals. The share price fell sharply in the autumn and will need to see signs of more positive news to help consolidate recent improvement.
We currently list Ashmore as a SELL
Tesco (trading statement)
We expect this update to reiterate that UK trading conditions remain challenging. Investors will be keen to hear how the company's international operations are performing and we suspect it will report positive progress. However, as with others in its sector, we suspect the UK operations to be uninspiring.
Overseas operations continue to offer growth opportunities and diversification of revenue streams, which still makes Tesco more attractive than its UK centric rivals.
We currently list Tesco as a BUY
Other companies reporting today include Booker (Q3 interim results) – BUY, Mothercare (Q3 trading statement) – SELL, Cape (trading statement) - HOLD
AGA Rangemaster (trading update)
AGA Rangemaster's last update pointed to slowing demand for its iconic cookers in Europe. The group intends to raise prices for its products at the start of the new year and investors will hope sales of its newest products can help alleviate the revenue decline. As a result of the economic situation the company has also been reorganising some of its operations.
We currently list AGA Rangemaster as a BUY
Other companies reporting today include Fresnillo (Q4 operations review) - BUY
Economic announcements for the w/c 9 January
10 January, UK housing Market Survey, December – RICS
Last month the headline index from the RICS housing market survey improved, rising to minus 17 from minus 24 in October. The index tracking new enquiries was unchanged at plus 7, while the index tracking new instructions rose from plus 3 to plus 10. So, in November it appears supply saw a marginally better improvement than demand, meaning downward pressure on prices.
10 January, Retail Sales Monitor, December – BRC/KPMG
Today's retail sales monitor from BRC and KPMG will draw close attention. What will the index say about the very important December trading period?
12 January, Governing Council meeting of the ECB in Frankfurt – ECB and Monetary Policy Committee Meeting and Announcement – Bank of England
In today's meetings of the interest rate setting committees of both the Bank of England and ECB, the euro area bank is more likely to command the headlines. While it is possible that the Bank of England may announce more QE, on balance it seems likely that this is still a month or more away. The ECB, however, is widely expected to cut rates from 1.0 per cent. If it does so, it will be the third month in succession to see a rate cut.
Other economic announcements include:
• Financial Services Survey – CBI/PwC
• December UK housing Market Survey – RICS
• Retail Sales Monitor, December – BRC/KPMG
• EU National accounts (GDP Q3 3rd estimate) – Eurostat
• UK Trade, November 2011 – ONS
• Governing Council meeting of the ECB in Frankfurt – ECB
• Monetary Policy Committee Meeting and Announcement – Bank of England
• Index of Production, November 2011 – ONS
• Producer Price Index, December 2011 – ONS