Thursday’s City schedule presents investors with a trio of high profile results statements.
FTSE 100 listed medical products group Smith & Nephew PLC (LON:SN.) is set to receive a boost from the recent US corporation tax cuts and will shed further light on subject at its full-year results on Thursday.
The global medical technology business said in January that the tax reforms recently brought in by Donald Trump would see its effective tax rate lowered to 20-21%, down from 25% previously.
The final tax rate will be disclosed with S&N’s results. JP Morgan said the tax rate guidance was better than it had expected, prompting it to up its earnings per share forecasts by 5.3-6.7% over the next few years.
The financial services firm expects earnings per share of US$0.89 in 2017 and US$1.00 in 2018, up from US$0.87 and US$0.90 previously.
“With a relatively unlevered balance sheet (0.6x EBITDA) giving flexibility (most likely M&A, but possibly a share buyback), a new cost savings programme (to be announced at FY results) and a new CEO TBC, we see the valuation as attractive, coupled with catalysts,” wrote analyst David Adlington, adding that the recent weakening of the US dollar is also good news for S&N as it reports its result in the greenback.
Order-book strength key for Bellway
By the time the trading update from fellow house-builder Bellway PLC (LON:BWY) comes out on Thursday most of its sector peers will have weighed in.
The house-builders outperformed the market by around 30% in 2017, helped by the government’s “help to buy” initiative – which was more like a “have some free money” initiative from the house-builders’ perspective, but the sector may see slower selling price rises this year while build-cost inflation may curtail squeeze margins.
Shareholders will be looking at the strength of the order book, which at the beginning of October 2017 had grown 17.4% from the year before to £1.36bn.
The group is targeting volume growth of at least 5% in the current financial year and the overall average selling prices to increase to around £280,000, so with half the financial year gone it will be able to give a meaningful update on progress.
North American progress wanted from Compass
Food services giant Compass Group PLC (LON:CPG), which delivers a first quarter trading update on Thursday, is still coming to terms with the tragic death of CEO Richard Cousins in Australia at the beginning of the year.
New CEO Dominic Blakemore has taken up the reins early and will provide a trading update at the group’s annual general meeting.
In a preview, The Share Centre’s Graham Spooner commented: “At the full year results in November the company said it continued to make good progress in its North American operations although the offshore division remained weak.”
He added: “The market will be focusing on those two areas as well as the order pipeline. Compass has said it expects its tax rate to fall from 26.5% to 24% as a result of the corporate tax changes in the US so any guidance on full year results will also be of interest.”
Thursday Agenda
Bank of England MPC meeting: Minutes, quarterly inflation report
Trading updates: Compass Group PLC (Q1) (LON:CPG), Bellway PLC (LON:BWY), AA plc (Q4) (LON:AA.), TalkTalk PLC (Q3) (LON:TALK), Thomas Cook PLC (Q1), Tate & Lyle PLC (Q3) (LON:TATE), DFS Furniture Plc (LON:DFS), Sophos PLC (Q3) (LON:SOPH), Ei Group PLC (LON:EIGE)
Finals: Smith & Nephew PLC (LON:SN.), Beazley PLC (LON:BEZ)
Interims: Ashmore group PLC (LON:ASHM)
FTSE 100 ex-dividends: Sage Group PLC (LON:SGE)
Economic data: RICS UK house price survey; US weekly jobless claims