Mitchells & Butlers Plc (LON:MAB) is expected to report a slowdown in sales growth for the fourth quarter on Thursday.
Morgan Stanley analyst Jamie Rollo, in a note, said the bank estimated 1.5% like-for-like sales growth for the period, compared to 2.6% in the preceding three months. Rollo also highlighted the pub group’s fourth quarter goes against the toughest comparatives from 2016.
“Our forecast therefore implies 2-year growth of 3.0%, which would actually be stronger than the 0.7% 2-year rate for the first 43 weeks,”
“At the Q3 update, management stated that performance was driven by drink sales (+3.4% Q3LfLgrowth sales), which had been boosted by good weather.
“It continued to outperform the market by c.1-2pts, helped by a flurry of initiatives and heavy capex spend.”
The analyst added: “For FY17, we forecast revenues of £2.2bn, EBIT of £314m and EPS of 35.9p, a touch above consensus at£2.1bn, £310m and 34.4p, respectively as we include the extra week.”
“The stock trades on just 7.2x2018e P/E and 6.8x EV/EBITDA, which looks cheap for a property-backed company with relatively high margins, but the industry is facing a challenging cocktail of slowing LfLs, rising cost inflation,and rising capex needs.”
Eyes on Capita Plc ahead of Thursday’s interim results
Attentions will be on Capita Plc (LON:CPI) as it releases first half results on Thursday, but analysts reckon the financials will be “no lower” than seen in the preceding six months.
In a preview note, Numis analyst Julian Cater, highlighted: “The 2H 2016 profit before tax (PBT) figure pre the £39.6m accrued income write-off was £229.6m, from which we have deducted £30m of profit from CAS (to be treated as discontinued), £4m from the disposed specialist recruitment businesses and £5m of incremental pension costs.”
He added: “Management will provide updated FY17 guidance. Its initial view expressed at the prelims and re-iterated at the June trading update, post early work on the adoption of IFRS 15, was that it did not expect the financial performance to be any lower than market expectations on a pre-IFRS 15 basis (PBT of c.£420m, excluding CAS and Specialist Recruitment).”
Cater noted that Capita didn’t re-iterate its guidance in the group’s September trading statement.
“We attribute this simply to the proximity to the interims,” the analyst said.
“We note that under IFRS 15, the gross revenue attrition we had anticipated for FY17 (c.5%) from completion of business transformation contracts and pricing step-downs will now not occur.
“2H17 will also see a more material impact of the cost savings programmes initiated in 4Q16, and the turnaround of some of the underperforming businesses (IT Services, Capita Europe, property, employee benefits consulting and learning services).”
Significant announcements expected on Thursday September 21:
Trading update: IG Group PLC (LON:IGG), Mitchells & Butlers PLC (LON:MAB), NCC Group PLC (LON:NCC)
Finals: Kier Group PLC (LON:KIE)
Interims: Capita PLC (LON:CPI), Cambridge Cognition Holdings PLC (LON:COG), Elektron Technology PLC (LON:EKT), Quixant plc (LON:QXT), Safestyle UK PLC (LON:SFE), Scisys Plc (LON:SSY), The Mission Marketing Group PLC (LON:TMMG) Venture Life PLC (LON:VLG)
Ex-dividend factors: 0.9 points off the FTSE 100 index - Old Mutual PLC (LON:OML),Taylor Woodrow PLC (LON:TW.)
Economic data: UK public sector finances, BBA UK mortgage lending; US weekly jobless claims