Charles Stanley’s award-winning Private Client Research Team present a look at what is coming up next week on the markets, who is reporting and what to look out for.
Next week’s reporting highlights include:
Kingfisher – has the first quarter been as bad as the weather?
Severn Trent – all eyes on takeover prospects
Tate & Lyle – are higher commodity costs biting?
First-quarter trading update from Kingfisher, the world’s third-largest home improvement retailer. The company last updated the market on 26 March, when it reported a weak set of full year results. The share price was broadly flat on the statement, but has advanced by 17% since. Market expectations are for dividend growth of 5% this year, predicated on subdued sales growth, a flat operating margin and broadly unchanged interest charge. Attention next week will focus on trading performance and comments regarding the outlook; the share price level suggests that investors expect trading in the company’s key markets to remain subdued but resilient over the medium term.
Full-year results from Severn Trent, mainly a regulated water company operating in the Midlands and Wales. The company last updated the market in February, when it confirmed full-year earnings expectations and reiterated that revenue at SVT Water remains ahead of last year due to price rises, but offset by lower commercial volumes and higher costs. The share price barely moved on the statement but has soared since in response to a takeover bid, which Severn Trent has rejected. Market expectations are for dividend growth of 8% this year, based on a commitment to growth of RPI+3% to 2015. Attention next week will focus on operational performance at SVT Water and the outlook for the smaller non-regulated business SVT Services, where early signs of improvement continue to be offset by investment. The share price level suggests that investors believe the consortium will return with a higher offer and not be deterred by the next regulatory price review.
Full-year results from Tate & Lyle, provider of ingredients to the food, beverage and other industries. The company last updated the market in March, when it released a year-end trading update reaffirming modest progress over the prior year; the share price dipped slightly on the statement but has risen since. Market expectations are for dividend growth of c. 5% this year, thanks to good revenue growth. Attention next week will focus on input prices, sucralose sales and on progress being made on restructuring aimed at improving returns in Speciality Foods; the share price level suggests that investors are concerned over the potential impact of high commodity costs.
This report was compiled by Charles Stanley’s dedicated Private Client Research Team comprising:
Jeremy Batstone-Carr (Head of Private Client Research)
Nic Clarke (Banks, Insurance, Other financials)
Tony Shepard (Travel, Support Services, Oil)
Tom Gidley-Kitchin (Construction, Household Goods, T&T, Mining)
Sam Hart (Retail, Leisure, Media Beverages)
Tina Cook (A&D, Utilities, REITs and Tobacco)
Rae Ellingham (Pharma, Food Producers, Industrials)