Earnings season continues and investors have high expectations for the results of some major companies reporting next week, such as Vodafone and Burberry.
What you should pay attention to:
Vodafone (VOD.L) – Reports on Tuesday, May 14
Vodafone shares have struggled and are among the worst performing FTSE 100 stocks over the past five years, so why should investors keep an eye on the telecoms provider when it reports its annual results next Tuesday?
Chief Executive Margherita Della Valle took the helm in January 2023 and launched a major restructuring last May that saw the company seek to combine its UK assets with those of Three and sell both its Italian and Spanish businesses in two deals valued at a total of €12 billion (£13 billion, €22 billion).
“Vodafone’s recent third-quarter results have given investors some optimism, but major problems remain,” said Matt Britzman, equity analyst at Hargreaves Lansdown.
Investors should pay attention to the timing of the sale of the Spanish and Italian businesses, as well as any news on the Competition and Markets Authority’s investigation into the proposed merger of Vodafone’s UK assets with those of Three.
“The regulator does not appear to welcome the plan so far. Margherita Della Valle hopes these deals will complete the reorganisation she had already targeted in May 2023 and leave the company with a new, five-tier reporting structure for Germany, the UK, the rest of Europe, Turkey and Africa,” wrote Russ Mould, investment director, Danni Hewson, head of financial analysis, and Dan Coatsworth, investment analyst, all of AJ Bell.
“Watch also for comments on the planned €2 billion share buybacks following completion of the Spanish and Italian transactions,” they noted.
Last year, Vodafone shares were ranked 92nd in the FTSE 100. In terms of price change over the last five years, they are ranked 93rd, according to AJ Bell, thanks to a decline of over 50%.
Burberry (BRBY.L) – Reports on Wednesday, May 15
Luxury goods group Burberry will tell investors when it presents its annual results on Wednesday whether London is still losing out to Paris and Milan as a destination for keen shoppers.
AJ Bell tells us that analysts are currently expecting total revenue of £2.9 billion, down 1 percent on a constant currency basis, and underlying operating profit of around £405 million.
This represents a forecast revenue loss of £120 million and a profit loss of £60 million due to currency fluctuations. Adjusting for these factors, operating profit is expected to be £465 million, representing a margin of 15.8%.
“Burberry’s share price has more than halved over the past year and is now back near the lows reached in the early stages of the pandemic in 2020 (although the £10 mark was support then, as it was in 2016 and 2012, so it will be interesting to see whether that level is broken or held this time),” wrote Mould, Hewson and Coatsworth.
Investors should focus on comparing the third quarter’s momentum with that of the beginning of the year. Any news on the company’s capital allocation policy will be of interest, as analysts now expect Burberry to cut its total dividend from 61 to 52 pence per share.
BT- (BT-AL) – Reports on Thursday, May 16
BT’s share price is currently back at the level first reached immediately after the company’s IPO in late 1984 – when Margaret Thatcher was Prime Minister and Nigel Lawson was Chancellor of the Exchequer.
Increased competition, regulation and debt led to minimal profit increases and thus to a sharp decline in share prices and dividend cuts.
New boss Allison Kirkby reiterated her full-year guidance during the third-quarter update in February, as Openreach continues to roll out Fibre to the Premises (FTTP) to improve the country’s broadband infrastructure and EE adds both business and residential customers.
BT expects growth in both revenue and adjusted EBITDA for the year to March 2024. Consensus forecasts are for revenue to grow 2.1% to £20.9 billion and adjusted EBITDA to rise 2% to £8.1 billion, ahead of increases of 0.8% and 1.4% to £21 billion and £8.3 billion respectively in fiscal 2025.
The company also expects capital expenditure of £5 billion in the year to March (compared to £5.3 billion a year earlier) and free cash flow of between £1.0 billion and £1.2 billion (compared to £1.3 billion previously).
Analysts expect capital spending to stagnate in the coming year and free cash flow to increase slightly.
There is no expected change to BT’s annual dividend of 7.7% per share and the company does not have a share buyback program.
Walmart (WMT) — Reports on Thursday, May 16
Walmart will announce its results on Thursday before the market closes. For the quarter ended in April, analysts surveyed by Zacks Investment Research expect adjusted earnings of 52 cents per share, an increase of 6% from the previous year. Sales are expected to rise by 4.5% to $159.2 billion.
Doug McMillon, President and CEO, and John David Rainey, Executive Vice President and Chief Financial Officer, will host a conference call that day to discuss the results and answer questions.
This is because profits and sales accelerated by 7 percent and 6 percent respectively in the holiday quarter compared to the previous quarter. At the same time, global e-commerce sales increased by 23 percent, surpassing the $100 billion mark. In the US alone, e-commerce sales increased by 17 percent.
The company also recently announced plans to acquire smart TV maker Vizio for $2.3 billion, or $11.50 per share, and said it plans to open or expand more than 150 stores in America over the next five years.
Other companies that released their reports this week include:
Monday, May 13
Cerillion (CER.L)
Softbank (9434.T)
Suzuki Engine (7269.T)
Bridgestone (5108.T)
Tencent Music (TME)
Ferrovial (FER.MC)
Hochtief (HOT.MU)
Tuesday, May 14
Flutter Entertainment (FLTR.L)
Greggs (GRG.L)
Virgin Money UK (VMUK.L)
Curries (CURY.L)
Sony (SONY)
Tencent (0700.HK)
Alibaba (BABA)
Bayer (BAYN.DE)
Home Depot (HD)
Wednesday, May 15
Compass (CPG.L)
Experian (EXPN.L)
Imperial Brands (IMB.L)
JD (JD)
Commerzbank (CBK.DE)
TUI (TUI.L)
Ubisoft (UEN.DE)
Cisco (CSCO)
Thursday, May 16
United Utilities (UU.L)
Premier Foods (PFD.L)
easyJet (EZJ.L)
Baidu (BIDU)
Applied Materials (AMAT)
Under Armour (UAA)
Friday, May 17
Land Securities (LAND.L)
You can find the full Yahoo Finance calendar here Here.
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