The coming week will see results and updates from several big names across both the main and junior markets, with announcements expected from movie theatre chain Cineworld, water firm United Utilities and video game services group Keywords.
Also in the diary are B&Q owner Kingfisher, polling group YouGov, housebuilder Bellway and catering firm Compass, while on the macro front investors will be eyeing the latest UK unemployment and inflation data as well as the US GDP and a bundle of flash PMI readings from both sides of the Atlantic.
Pandemic bonus may be fading at Kingfisher
Kingfisher PLC (LON:KGF) has notched up three quarters of eye-catching year-on-year (YOY) like-for-like (LFL) sales growth so full-year results should be a cheery affair.
The owner of the do-it-yourself (DIY) chains B&Q, Screwfix, Castorama and Brico Depot has seen its shares leap from around 126p a year ago to around 314p now, resulting in an unexpected return to the FTSE 100.
Analysts are expecting full-year LFL sales growth of 11% YOY in the UK and Ireland, with France achieving 5.3% growth and Poland 5%.
“One key point of interest will be whether Kingfisher thinks these strong trends will persist in the year to January 2022 and beyond. Analysts are not sure, as lockdowns unlock and consumers venture out of their homes once more,” said AJ Bell investment director, Russ Mould.
Nevertheless, analysts are expecting the company to resume paying dividends after payouts were suspended last year because of business uncertainty caused by the pandemic.
A YouGov survey says…
YouGov PLC (LON:YOU) is one among the many announcing results on Tuesday, with the online market researcher putting out numbers for the six months to end-January.
In a January trading update the company, whose shares rose over 50% last year and are up sevenfold over the past five, said not to expect too much, with most of its revenue growth and profit margin delivery likely to be weighted towards the second half of its financial year.
YouGov said it performed well during the period with underlying revenue growth across its three divisions, led by Data Services amid strong demand for more “tactical, fast turnaround projects”.
Following the recent acquisition of sports research agency Charlton Insights in Canada, broker Peel Hunt was looking to hear more, as this addition “should further support the growth of its Sports syndicated products, which have been growing very fast since the acquisition of SMG Insight back in 2018”.
Keywords caps off strong year
Video game services group Keywords Studios PLC (LON:KWS), which is due to report its final results on Wednesday, has been one of the few firms that has received a boost to its business during the pandemic as electronic entertainment demand boomed during lockdown.
The firm has forecast organic revenue growth for the year of 12%, although margins are likely to be the key focus as well as how the firm expects its profitability to hold up in a post-coronavirus era.
Another question is likely to be the ongoing integration of the company’s recent acquisitions, having made around seven since May, as well as the company’s strategy going forward following the new prominence of gaming in the mainstream market.
Sales in March will be the focus in Bellway’s interims
Bellway PLC (LON:BWY) has already revealed most of the relevant numbers covering the six months to the end of January and with the government, as ever, in its corner, they made good reading shareholders.
The FTSE 250 housebuilder completed deals on 5,656 homes in the six months to end-January, an increase of 6.3% over the same time a year ago.
Revenues rose by more than 12% to £1.72bn, helped by both the rise in completions and a 5.8% rise in the average sale price to £303,200.
Some of this inflation was temporary, Bellway said, and over the full year, average sale prices are expected to revert to around £293,000.
UBS is forecasting operating margins of 17.0%, down from 19.6% a year earlier. It has pencilled in a figure of £288mln for profit before tax.
“We will watch out for the sales rate trend in March after a modest -2% decline recorded in H1 [first half] to 0.69x as well as more details on FY21 [fiscal 2021] guidance, including prices, volumes and margin development,” the Swiss bank said.
United Utilities expected to hail a strong financial performance
United Utilities Group PLC (LON:UU.) issues a trading update on Thursday and the market will do its best to contain its excitement.
The company had a capital markets event earlier this month at which it said it had accelerated investment into this first year of the new regulatory period and targeted those areas that benefit customers and the environment most.
“As a result, we are pleased to provide updated guidance for the outperformance we expect to achieve against our customer ODIs [outcome delivery incentives] of up to £20 million for this year,” said Steve Mogford, the chief executive officer of the water utility company.
Based on the company’s presentation deck from that capital markets event the trading update will contain mentions of a “strong financial performance” and “excellent operational delivery”, as well as details on that “accelerated investment” it has made.
Cineworld hopes for blockbuster reopening
Cineworld Group PLC (LON:CINE) will report its final results on Thursday in what many are expecting to be something of a horror show as the pandemic battered the cinema industry.
The chain has been forced to rely on every possible lifeline to stay afloat as lockdown restrictions across the world forced it to shutter its screens and simply wait out the pandemic. In November it managed to secure another US$450mln loan as well as an extension of a US$111mln revolving credit facility, while the firm may also start to see a light at the end of the tunnel as vaccine rollouts raise hopes of a return to normality.
With this in mind, investors are likely to focus heavily on how the company sees the rest of the year panning out, with a swift recovery likely to be crucial to maintaining confidence assuming it UK cinemas reopen around May 17 as per the government’s lockdown relaxation plan.
Compass direction remains unclear
A Compass Group PLC (LON:CPG) update for the six months to end-March is on the menu for Thursday, just a few weeks after the catering colossus said its sales so far in 2021 have remained depressed by the effect of the coronavirus pandemic.
Closures of offices and sports stadiums have hit the FTSE 100 group’s top line, while its school dinners business has been making uncomfortable headlines for the company.
Organic revenue in the quarter ending in December was down by a third, a very slight improvement on the 34.1% decline for the quarter ending its previous financial year.
After its Chartwells school dinners business was accused of profiteering by providing insultingly inadequate school meals packages during lockdown, the FTSE 100 group said it had “taken several corrective measures that include improved supply chain processes, additional guidance and resources for our employees, and stronger quality assurance checks”.
For this update, investors will be focused on looking forward to when economies can reopen.
“We don’t expect these numbers to look pretty,” said fund manager Steve Clayton at Hargreaves Lansdown.
“What really matters is how Compass can take advantage of the reopening of economies. Will the business be able to capitalise on its financial strength to gain share against weaker rivals? So far the market is unconvinced, with Compass lagging against major rivals Aramark in the US and Sodexho of France.”
Smiths Group eyed for updates
Smiths Group PLC (LON:SMIN), the FTSE 100 engineering firm, is set to cap off the week with its first-half results, with investors likely to be eyeing trends across its four main divisions for any signs of increasing momentum.
A first quarter trading statement in January indicated some stabilisation in the company’s industrial business, however, energy and aerospace were still showing weakness so investors will be looking to see if the situation has changed.
Also in focus will be the dividend, with analysts having pencilled in a total payment for the current year of 40p per share, as well as the status of the firm’s planned spin-off of its medical division.
Macro matters
The latest set of jobs figures on Tuesday and inflation numbers on Wednesday will be the main UK macroeconomic data in the week, though the Office for National Statistics calls this ‘stats week’ as there’s a lot of other reports also on the agenda, including retail sales on Friday.
Consumer price inflation is forecast to nudge up slightly but remain below the Bank of England’s band of tolerance, so should not give rate setters any reason to reconsider the stance set out last week.
UK unemployment is rate is also expected to rise, having crept up to 5.1% in December, and to continue rising until at least early next year, as job losses often do even as economies emerge out of recession.
With the rollout of COVID-19 vaccines, the reopening of schools and the staggered re-opening of other sectors from mid-April, Capital Economics recently suggested that “the bulk of the falls in employment may now be behind us” and rather than rise to a peak of 6.5% as many have forecast, “we now think the unemployment rate will peak at just over 6.0% early next year”.
The claimant count. This hit 2.6 million last time around. This includes not those who have been unfortunate enough to lose their job but are claiming some form of unemployment-related benefit, such as Universal Credit. Note how the claimant count has shot up much, much faster than the unemployment figure – it has gone up by 1.2 million, more than doubling. If there is any good news here it is that the claimant count stopped rising in August.
Another of the highlights of the week will be a conference on digital currencies held by the Bank for International Settlements from Monday through to Thursday, with speakers including Fed head Jerome Powell, European Central Bank president Christine Lagarde, former Bank of England guvnor Mark Carney and Microsoft president Brad Smith.
The “Innovation Summit 2021: How can central banks innovate in the digital age?” web summit “should interest all of you folks who are cryptocurrency enthusiasts as the main topic will be central bank digital currencies,” said market analyst Marshall Gittler at BDSwiss.
“Before you get too excited,” he added, “let me point out that CBDCs are nothing like Bitcoin or the ghastly Dogecoin. You are never going to get rich buying a CBDC, any more than you would by stockpiling dollar bills or euros. The purpose of CBDC is to facilitate transactions, not to enable people to get rich by HODLing them. That’s because CBDC will be designed to be currencies used for transactions, not assets to make a killing off of.”
GameStop's new start?
Meanwhile, over in the US Reddit favourite GameStop Corp (NYSE:GME) will announce quarterly results on Tuesday, with its shares down 45% from January’s higher but still around 1,000% higher than at the start of the year.
Some might argue that the day-traders of Reddit’s WallStreetBets don’t really care about the financial fundamentals of the stumbling video games retailer, it’s more about the battle with short-selling hedge funds.
But for those that do, Wall Street analysts are forecasting earnings and revenues for the three months to end-January to be higher than this time last year.
Earnings per share are seen coming in at US$1.46, according to the Street consensus, up 15%, on revenues 2% higher at US$2.2bn.
While in its recent annual report, GameStop painted a gloomy picture for the future of bricks-and-mortar games retailing, saying it “may take significant time and resources” to respond to the moving of games purchases through digital channel, this month the company recruited major investor Ryan Cohen to join a strategic-planning committee to "identify initiatives that can further accelerate the company's transformation".
Cohen, the co-founder of online pet products retailer Chewy, has been known to move the company’s shares by tweeting pictures of ice cream cones or tog dogs, so harnessing his powerful influence seems a start.
This week will see if the GameStop frenzy has further legs.
Significant announcements expected for week ending 26 March:
Monday March 22:
Finals: Kingfisher PLC (LON:KGF), Centamin PLC (LON:CEY), Blackbird PLC (LON:BIRD), Yew Grove REIT PLC (LON:YEW)
Tuesday March 23:
Finals: Alliance Pharma PLC (LON:APH), Arrow Global Group PLC (LON:ARW), Cambridge Cognition Holdings PLC (LON:COG), DP Eurasia NV (LON:DPEU), Elementis plc (LON:ELM), Energean PLC (LON:ENOG), Ergomed PLC (LON:ERGO), H&T Group Plc (LON:HAT), Henry Boot PLC (LON:BOOT), Judges Scientific PLC (LON:JDG), Longboat Energy Plc (LON:LBE), LoopUp Group PLC (LON:LOOP), Luceco PLC (LON:LUCE), M.P. Evans Group PLC (LON:MPE), Mortgage Advice Bureau Holdings PLC (LON:MAB1), Old Mutual Limited (LON:OMU), Personal Group Holdings PLC (LON:PGH), The pebble Group PLC (LON:PEBB), Zotefoams PLC (LON:ZTF)
Interims: YouGov PLC (LON:YOU), Essensys PLC (LON:ESYS), MJ Hudson Group PLC (LON:MJH)
Economic data: UK unemployment, UK CBI industrial trends
Wednesday March 24:
Trading announcements: Diploma PLC (LON:DPLM), Halma PLC (LON:HLMA)
Finals: Anglo Pacific Group PLC (LON:APF), Burford Capital Limited (LON:BUR), Circassia Group PLC (LON:CIR), CPPGroup PLC (LON:CPP), ECSC Group PLC (LON:ECSC), Kenmare Resources plc (LON:KMR), Keywords Studios PLC (LON:KWS), Pendragon PLC (LON:PDG), Sopheon PLC (LON:SPE), Strix Group PLC (LON:KETL), TClarke PLC (LON:CTO), Telit Communications PLC (LON:TCM)
Interims: Bellway PLC (LON:BWY), Softcat PLC (LON:SCT), Applied Graphene Materials PLC (LON:AGM)
Economic data: UK inflation, UK flash PMIs, US durable goods orders, US flash PMIs
Thursday March 25:
Trading announcements: United Utilities Group PLC (LON:UU.), Compass Group PLC (LON:CPG)
Finals: Cineworld Group PLC (LON:CINE), SIG PLC (LON:SHI), Allied Minds PLC (LON:ALM), BBGI Global Infrastructure SA (LON:BBGI), Biome Technologies plc (LON:BIOM), Ebiquity PLC (LON:EBQ), Faron Pharmaceuticals Oy (LON:FARN), Funding Circle Holdings PLC (LON:FCH), International Public Partnership Ltd (LON:INPP), Lamprell PLC (LON:LAM), Learning Technologies Group PLC (LON:LTG), Regional REIT Ltd (LON:RGL), Robinson PLC (LON:RBN), S4 Capital PLC (LON:SFOR), Safestyle UK PLC (LON:SFE), Secure Trust Bank PLC (LON:STB), Surgical Innovations Group PLC (LON:SUN), Tandem Group PLC (LON:TND), Venture Life Group PLC (LON:VLG), International Public Partnerships Ltd (LON:INPP)
Interims: Genedrive PLC (LON:GDR)
FTSE 100 ex-dividends to knock 7.97 points off the index: British American Tobacco PLC (LON:BATS), NatWest Group PLC (LON:NWG), Prudential PLC (LON:PRU), Schroders PLC (LON:SDR), Pearson PLC (LON:PSON), Ferguson PLC (LON:FERG)
Economic data: US GDP, US jobless claims
Friday March 26:
Interims: Smiths Group PLC (LON:SMIN)
Economic data: UK retail sales, US personal incomes, US Michigan consumer sentiment