Luxury goods brand Burberry presents results this Wednesday. Above, British model Cara Delevingne at a Burberry show in Kensington Gore, west London. ·Joel Ryan, Associated Press
Earnings season continues, and investors have some high expectations for some of the major companies reporting next week such as Vodafone and Burberry.
Vodafone shares have struggled and they rank among the worst performing FTSE 100 names over the past 5 years. So why would investors keep tabs on the telecoms operator when it presents its full-year results next Tuesday?
•USD
(VOD.L)
Chief executive Margherita Della Valle took the helm in January 2023 and last May launched a major overhaul which has seen the company try to merge its UK assets with those of Three and sell both its Italian and Spanish operations in two deals with a combined value of €12bn (£13bn, .
"Vodafone’s recent third-quarter results provided some optimism for investors to cling to, but wider issues remain,” Matt Britzman, equity analyst, Hargreaves Lansdown, said.
Investors should focus on the timing on the sale of the Spanish and Italian businesses and any updates on the Competition and Markets Authority’s investigation into the proposed merger of Vodafone’s UK assets with those of Three.
“The regulator, thus far, does not seem to welcome the plan. Margherita Della Valle hopes these deals will complete the reorganisation that she targeted back in May 2023 and will leave the company with a new, five-pronged reporting structure, of Germany, UK, Other Europe, Turkey and Africa,” Russ Mould, investment director, Danni Hewson, head of financial analysis, and Dan Coatsworth, investment analyst, all of AJ Bell, wrote.
“Also watch out for any comment on the proposed €2bn share buybacks after completion of each of the Spanish and Italian deals,” they noted.
Over the past year, Vodafone shares rank 92nd within the FTSE 100. In terms of share price change and over the past five years, they rank 93rd, thanks to a fall of more than 50%, according to AJ Bell.
Luxury goods group Burberry will tell investors if London is still missing out to Paris and Milan as a tourist destination for high-spending shoppers as it presents its full-year results on Wednesday.
•USD
(BRBY.L)
AJ Bell tells us that analysts currently expect total sales of £2.9bn, a 1% drop on a constant currency basis, and an adjusted operating profit of around £405mn.
That is with a forecast £120m hit to sales and a £60m hit to profits from currency movements. Adjust for that and operating profit is seen reaching £465mn for a margin of 15.8%.
“Burberry’s shares have more than halved in the past year, to leave them back near the lows plumbed during the early stages of the pandemic in 2020 (although the £10 mark provided support then, as it did in 2016 and 2012, so it will be interesting to see if that level is breached or holds this time around),” Mould, Hewson and Coatsworth wrote.
Investors should focus on comparing momentum in the third quarter compared to that shown earlier in the year. Any updates on the company’s capital allocation policy will be of interest as analysts now expect Burberry to cut its total dividend to 52p a share from 61p a share.
BT shares are currently back at levels first seen in the immediate aftermath of the company’s stock market flotation in late 1984 — when Margaret Thatcher was prime minister and Nigel Lawson was chancellor of the exchequer.
Increased competition, regulation and debt leading to minimal profit progression, has lead to a sharp decline in the stock, as well as dividend cuts.
•USD
(BT-A.L)
New boss Allison Kirkby reaffirmed full-year guidance, alongside the third-quarter update back in February, as Openreach continues to build out Fibre to the Premises (FTTP) to improve the nation’s broadband infrastructure, and as EE adds business and retail customers alike.
BT is expecting growth in both sales and adjusted EBITDA for the year to March 2024. Consensus forecasts are looking for 2.1% sales growth to £20.9bn and a 2% increase in adjusted EBITDA to £8.1bn, ahead of a 0.8% gain and 1.4% gain to £21bn and £8.3bn respectively in fiscal 2025.
The company also expects capital investment of £5bn in the year to March, compared to £5.3bn a year ago, and free cash flow of between £1.0bn and £1.2bn, down from £1.3bn.
Analysts think capex will be flat and free cash flow up modestly in the coming year.
No change is expected in BT’s annual dividend of 7.7p a share and the firm does not run a share buyback programme.
Walmart will report earnings before the bell on Thursday and for the April-ended quarter analysts polled by Zacks Investment Research expect adjusted profit of 52 cents a share, up 6% year over year. Revenue is forecast to rise 4.5% to $159.2bn.
Doug McMillon, president and chief executive officer, and John David Rainey, executive vice president and chief financial officer, will host a call on the day to discuss the results and answer questions.
•USD
(WMT)
It comes as holiday-quarter earnings and revenue for the January-ended quarter accelerated from the prior quarter, up 7% and 6%, respectively. Meanwhile, global e-commerce revenue increased 23% and topped $100bn. In the US alone, e-commerce revenue rose 17%.
It also recently announced plans to acquire smart TV maker Vizio for $2.3bn, or 11.50 a share, and said it would open or expand more than 150 stores in America over the next five years.
