Near high equity benchmarks and a degree of macro-market volatility should, in theory, spell good news for CFD and spread betting firm CMC Markets Plc (LON:CMC) as it releases results on Thursday.
CMC should show record profits growth despite the worries over a regulatory clamp-down.
Peel Hunt expects the FTSE SmallCap firm’s full-year net operating income to be 15% ahead of the previous year at a new record level of around £185mln.
Overall, the City broker expects CMC’s pre-tax profit to jump by 22%, also record profitability.
Peel Hunt said, of interest, will be a management update on the potential impact of new EU and UK regulations that come into effect this summer.
It said its current valuation for CMC already assumes a pessimistic view from impending regulatory changes - with the assumption of a 19% drop in UK/EU revenue, which is greater than the around 10% fall rival IG Group PLC (LON:IGG) is guiding for, and that is before mitigating actions.
However, the broker concluded: “In our view, CMC’s focus on high value professional clients will show regulatory resilience, and the shares will re-rate as the market sees the sustainability and attractions of this model.”
Used car market weighing on Auto Trader
Full-year numbers from FTSE 250-listed Auto Trader Group PLC (LON:AUTO) on Thursday are likely to make for poor reading as the second hand car market continues to suffer in the face of worries over diesel bans and the switch to electric vehicles.
Nicholas Hyett, equity analyst at Hargreaves Lansdown, said: “Growth is expected to be in the mid-single digits this year, a significant slowdown on previous years.
“But with Auto Trader now firmly established as the dominant player in a mature market, that’s only to be expected - especially as conditions in the UK car market look far from rosy.”
He added: “The good news is that with net debt considerably lower than in previous years and cash generation still strong, there’s plenty of scope for dividend growth in the near term.
“Our longer-term concern is that some pretty bruising competitors look to be eyeing up a slice of Auto Trader’s pie.
“Amazon have been rumoured to be looking at entering the car market and UK rival Motors.co.uk has recently announced a partnership with Facebook to list its wares on marketplace.”
Not so fine and MITIE
Back in March, outsourcer MITIE Group PLC (LON:MTO) issued a below expectations pre-close trading update, so the market will be hoping that the full-year numbers, also on Thursday, will contain no more bad news.
Peel Hunt is forecasting the FTSE SmallCap group to report an 8% fall in pre-tax profit to £61.4mln, with the consensus estimate at £61.6mln.
The broker expects MITIE’s full-year revenue to be up by around 2% year-on-year to £2.2bn with its Engineering, Security, Care & Custody business strong, but Property Management & Waste weak.
It also sees MITIE’s average daily net debt falling by £50mln year-on-year to around £286mln, but expects period-end net debt to be £50m-£70mln higher at around £197mln-£217mln.
Thursday June 7:
Finals: CMC Markets Plc (LON:CMC), MITIE Group PLC (LON:MTO), Auto Trader Group PLC (LON:AUTO), G3 Exploration Limited (LON:G3E), Ramsdens Holdings PLC (LON:RFX)
Interims: Impax Asset Management Group PLC (LON:IPX), RWS Holdings PLC (LON:RWS)
Ex-dividends: To knock 10.6 points off FTSE 100 index - Associated British Foods plc (LON:ABF), Evraz plc (LON:EVR), J Sainsbury plc (LON:SBRY), Johnson Matthey PLC (LON:JMAT), Scottish Mortgage Investment Trust PLC (LON:SMT), Vodafone Group PLC (LON:VOD)
Economic data: US weekly jobless claims; US consumer credit