The Week Ahead: Whitbread is ready to show its resilience
Monday 12 October 2009
The hospitality group Whitbread, the company behind the Premier Inn budget hotel chain, should confirm its resilient performance through the downturn when it issues results for the 26 weeks to 27 August tomorrow.
But given the upbeat September trading statement, which prompted a rise in consensus forecasts, Whitbread is "unlikely to surprise again so soon", according to Citigroup. Indeed, the group's focus on the domestic market and its capex-heavy business model may limit growth as a recovery takes root, Citi said, adding that other operators may prove "more interesting longer term plays for the recovery".
Not everyone is as cautious, with Panmure Gordon recommending that investors continue pile into the stock, which has made strong gains since the September trading statement. "The key to further outperformance is the continuation of the slowly improving RevPar [revenue per available room] trend at Premier Inn evident in the second quarter," the broker said, adding that the valuation was further supported by a strong balance sheet.
Numis is also optimistic, and expects a "confident" outlook statement, while Barclays Capital, which last week switched its recommendation on the company's stock to "overweight" from "underweight", said the update may prompt another review of consensus forecasts. "We would recommend buying shares ahead of this event as we believe that the previously set full year pre tax profit guidance is likely to prove conservative and we expect consensus forecasts to be revised upwards again," Barclays said. "We also see some opportunity for the group to accelerate the Premier Inn expansion programme and believe that, to this end, there is a good chance of corporate activity over the next six to 12 months."
Today: Results/updates: None significant
Tomorrow: Results/updates: Bellway, Booker, Ferrexpo and Whitbread.
Wednesday: Experian is due to post a trading statement for the first half of the year, and UBS expects a marginal slowing in organic sales growth for the credit-rating company, with a flat performance in year on year terms. "We expect limited commentary from management on margins other than a reiteration of the aim to deliver constant currency profit growth," the broker said. "On outlook, the company should be mildly optimistic given the annualisation of the Lehman bankruptcy, which should mean easier year on year comparisons for the core credit-checking activities."
Also on Wednesday, Punch Taverns' preliminary results should be in line with expectations, according to Numis, with net income per pub down 11 per cent. "With the company paying down almost £1.1bn of debt last year, we believe profit before tax should start to stabilise in 2010," the broker said, adding that further disposals and debt reduction, and signs of stabilisation, should act as a positive shares catalyst.
Results/updates: N Brown, Burberry, Eaga, Rio Tinto, Punch Taverns and Experian
THursday: UBS is looking for a 6 per cent rise in assets under management at Ashmore, the investment manager which is due to post a trading update later this week, with the figure forecast to rise from $24.9bn (£15.7bn) at the end of June to $26.4bn at the end of September. The rise is likely to be driven by investment performance and foreign exchange gains, while net fund inflows are forecast to total around $100m.
"While our forecast for net fund inflows is minimal, any positive number should be well received by the market, as Ashmore suffered net fund outflows of $7.5bn in 2009," the broker said, adding that positive fund inflows "would show that the group has turned the corner".
Also on Thursday, retailerWH Smith is due to post preliminary results. Earnings per share should rise by 18 per cent to 41.6p, according to Bank of America Merrill Lynch, which attributes its forecast to the share buybacks in 2008. Total sales are expected to rise to £1.35bn, up 0.4 per cent in year on year terms, with like for like sales down 4.4 per cent. "We forecast a net cash position of £33m, giving scope for higher dividend payouts or expansion going forward," the broker said. "We see upside risk to estimates given expected recent margins trends in the sector."
Results/updates: Partygaming, Mothercare, Renishaw, Uniq, WH Smith and Ashmore
Friday: Results/updates: Admiral, Clinton Cards, Chrysalis, Computacenter and NCC Group.
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