The Week Ahead: Growth hopes amid Homeserve’s woes

Today

Insuring households against the cost of broken boilers and burst pipes hasn’t prevented Homeserve from suffering its own in-house problems. It issued a profit warning in March, and is still awaiting the outcome of a long-running Financial Services Authority investigation into alleged mis-selling.

But Mike Murphy at Numis thinks it has been experiencing “stable UK and overseas growth”. He says the UK will have improved since its last update, with “further progress towards achieving its target of 200,000 gross new customers during the year” on track. He also expects its overseas businesses to have continued to grow. But he points out that there is a chance that the conclusion of the FCA investigation report could “lead to adverse comment/reputational damage”.

Results/Updates: Gleeson, Homeserve, InternetQ, Icap, Incadea, International Ferro Metals, Personal Group Holdings, Straight.

Tomorrow

The adage that when American sneezes, Europe catches a cold could be used for plumbing specialist Wolseley inasmuch as when the US starts booming, it benefits. Wolseley has been doing very well from an uptick in US business and analysts predict shareholders could be in for as much as a £300m dividend payout. Analysts at Panmure Gordon predict its half-year results tomorrow will show further signs of good growth there, making up for a weaker European business. Panmure says: “Wolseley is well-positioned to generate further shareholder value from here given ongoing US recovery coupled with a strong balance sheet, lending itself to further M&A and special dividends.”

Results/Updates: Ceres, ITE, Lidco, St Ives, Walker Greenbank, Wolseley.

Wednesday

Mid-week will be focused on supermarkets, with Sainsbury’s trading update alongside Tesco’s half-year results. Analysts expect Sainsbury’s to remain the strongest of the Big 4 in terms of sales growth. Shore Capital’s Darren Shirley and Clive Black think Sainsbury’s is trading on a “deserved, but modest, premium to both Tesco and Morrisons”, and they predict it will report comparable sales growth of 4.25 per cent to 4.5 per cent for the 16 weeks to 28th September. But the view on Tesco is less enthusiastic. Analysts at JP Morgan Cazenove downgraded it to underweight because of “structural changes” in the UK food industry, which may have a particularly damaging effect on Tesco because its “prices and ranges are margin-driven.” Its UK trading profit will be up 0.9 per cent, according to analysts at Cantor Fitzgerald. They also expect underlying group pre-tax profit to be down 6 per cent to £1.36bn, and they fear that Tesco’s UK operations have “a lot to get right if they are to hold the current margin”.

Results/Updates: Andor Technology, Domino’s, Dunelm, Electrocomponents, Halfords, Sainsbury’s, Tesco.

Thursday

Analysts at Jefferies think Ted Baker will be in fashion with investors next week when it reports its half-year results. They say its margins will be closely scrutinised but they expect it to post a pre-tax profit of £12.2m. Jefferies expects the fashion brand to report strong sales growth in the US, and reveal more detail about new stores in Asia.

Results/Updates: Carillion, Easyjet, FirstGroup, Ted Baker.

Friday

Things look a bit sweeter on Friday when Tate & Lyle releases a trading update. Investec’s scribblers rate the sweetener specialist a buy and conclude that although it has underperformed the FTSE 100 by 8 per cent since the start of September, and faces foreign exchange issues and possible problems with sugar tax in Mexico, it is still in favour because of its longer-term outlook. Investec says it remains a buyer because of the “long-term direction of travel and the fact that much of the bad news seems to be in the price”. Numis is also a fan, saying it likes the “revitalisation story” and chief executive Javed Ahmed “is a man to back, even if he has been grappling at turning a supertanker”.

Results/Updates: Aer Lingus, Tate & Lyle, Wood Group.

Economics Diary

Today

Net consumer credit figures, net lending, mortgage approvals, M4 money supply data, Hometrack housing survey.

Tomorrow

Purchasing managers’ index on manufacturing, Halifax house price data.

Wednesday

Purchasing managers’ index for construction, European Central Bank press conference, US ADP non-farm employment change, crude oil inventories.

Thursday

UK official reserves data, US Challenger job cuts, US factory orders, US unemployment claims.

Friday

UK new car registrations data, US average hourly earnings, US non-farm employment change and unemployment rate.