Paddy Power shareholders await full-year results with a soupcon of trepidation after news this week that chief financial officer Alex Gersh wants to quit.
UBS analyst Chris Stevens is expecting the bookie to reveal full-year revenue of around £1.7bn and £457mln of underlying earnings (EBITDA).
Adjusted earnings are forecast by UBS to be around 380p per share, with the dividend anticipated at 190p.
The market is expecting good things from Paddy Power, particularly in the online operations; however, last month, Morgan Stanley raised some caution while downgrading its view on the share to ‘underweight’.
The bank’s analysts reckon the market is expecting a “significant acceleration” in the group’s online revenue growth following the integration of the two formerly separate gambling businesses though, according to Morgan Stanley, the acceleration may not materialise.
“We see few silver linings from regulatory changes in Australia (and the 15% EPS hit not fully in consensus), and the company needs to address some major strategic issues (which may also limit balance sheet redeployment).
“These could all put pressure on the stock's premium valuation, and we see better returns elsewhere.”
Dividend surprise eyed for L&G
Things don’t usually change all that quickly for life assurance companies but there are still several things worth keeping an eye out for in full-year results from blue-chip firm Legal & General Group, according to Hargreaves Lansdown.
At the half year, the group recognised £126mln of mortality releases, as life expectancy increased more slowly than had been anticipated, the analyst noted, and if that trend has continued that has the potential to provide a significant boost to profitability at the full year.
The group also announced an agreement to sell its Mature Savings business, with proceeds from the sale, somewhere in the region of £650mln, set to be reinvested “in the attractive growth opportunities of Legal & General's core businesses”.
Details of exactly what that means have been thin on the ground, but a closed book of annuity assets wouldn’t be a surprise given L&G’s recent expansion in that area.
However, it will be dividend growth that most interests many investors, Salomon added, with analysts currently forecasting a final dividend of something in the region of 15.3p, which would represent a 6.5% uplift on last year.
Cold snap puts extra pressure on casual dining market
Restaurant Group's full-year numbers could be less than appetising, particularly with the sector in the spotlight recently as a result of some high profile closures, such as Prezzo’s culling of many of its branches.
Increased competition and consumers eating out less has made life tough for the Frankie & Benny’s, Garfunkel’s and Chiquitos’ owner leading to management instigating a strategic review, which is now complete.
Graham Spooner, an investment research analyst at The Share Centre, thinks the areas for investors to concentrate on will be Restaurant Group’s costs, dividend policy and whether volume momentum has been maintained.
Commentary on current trading in the wake of the “Beast from the east” will be keenly awaited as a barometer for the rest of the casual dining sector.
Rolls-Royce's simplification in focus
From bread rolls to Rolls-Royce, where restructuring efforts will be the main item on the menu in the company’s preliminary results.
Chief executive Warren East has been streamlining the business by reducing the number of divisions from five to three core units of aerospace, defence and power systems.
In its annual results, the company is expected to update the market on its plan to further simplify the business.
It may also reveal the outcome of its review into whether to sell its commercial marine business, which has been hit by weak demand in offshore oil and gas markets since 2015.
“Simplicity is the order of the day at Rolls. A lack of transparency arguably contributed to a series of profit warnings a few years ago, so we don’t blame CEO Warren East for trying to make things more straightforward,” said George Salmon, equity analyst and Hargreaves Lansdown.
“There should be financial benefits to streamlining too, as central and administrative costs come down.”
In January, Rolls-Royce confirmed that it was on track to meet in full-year expectations. Deutsche Bank expects revenue to rise to £14.8bn from £13.7bn in 2016 and pre-tax profit to increase to £887mln from £813mln.
Significant announcements expected
Finals: Rolls-Royce Holdings PLC (LON:RR), Paddy Power Betfair plc (LON:PPB), Legal & General Group PLC (LON:LGEN), Restaurant Group PLC (LON:RTN), Anpario Plc (LON:ANP), Breedon Group PLC (LON:BRE), Bioquell PLC (LON:BQE), CLS Holdings PLC (LON:CLS), esure Group PLC (LON:ESUR), FDM Group Holdings PLC (LON:FDM), 4Imprint Group PLC (LON:FOUR), Hill & Smith Holdings PLC (LON:HILS), Lookers PLC (LON:LOOK), Microgen plc (LON:MCGN), PageGroup PLC (LON:PAGE), NMC Healthcare PLC LON:NMC), Ophir Energy Plc (LON:OPHR), Stock Spirits Group PLC (LON:STCK), Tritax Big Box REIT PLC (LON:BBOX), Tyman PLC (LON:TYMN), WANDisco PLC (LON:WAND)
Interims: 88 Energy Limited (LON:88E), Netcall plc (LON:NET), River and Mercantile Group PLC (LON:RIV), St Ives PLC (LON:SIV)
Trading updates: DS Smith PLC (LON:SMDS)
Economic data: Halifax UK house price survey; US ADP employment; US international trade; US Consumer credit; Federal Reserve Beige Book