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Compass FY results - 26 November 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘The recovery at Compass group remains firmly on track. Organic revenues (+5.9pc against +5.0pc at the interim stage) and the group profit margin (5.8pc versus 5.7pc at the interim stage) continue to gain momentum, both aided by ongoing management initiatives and earlier downsizing. In addition, the group is also likely to prove a beneficiary of the recent downturn in food commodity prices.
As for the wider picture, management has underlined the group's balance sheet and cash flow strengths, whilst the new financial year has started well, with a good degree of sales visibility remaining. Confidence in the company's outlook has been cemented via an 11pc increase in the dividend payment.
Overall, although management concedes that it cannot afford to become complacent, given the challenging economic backdrop, the company continues to build on progress made to date. The shares retain defensive qualities in uncertain times and existing leadership have strong track records in sculpting performance recoveries and even takeover bids in better times - Mr Cousins at BPB and Mr Gardner at Manchester United. On balance, market consensus opinion remains positive in tone.’
Barclays capital fund raising update - 18 November 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
‘Barclays has clearly recognised the concern emanating from some of its shareholders in broadening the availability of the capital raising to interested investors. Whilst the amount of capital being made available is relatively small, it should nonetheless quell most of these concerns.
The broader picture remains unchanged. There are still overarching worries within the banking sector as to whether even this round of capital raising will be the last, and the wider economic uncertainty looks likely to continue to hamper prospects.
More positively, Barclays is clearly comfortable with effectively paying a premium in raising capital this way, rather than approaching the government, in order to ensure its commercial independence. Furthermore, the fact that there was such a clamour would suggest that even any further capital raising exercises could find buying interest. It still has the latter part of next year as an aim in resuming the payment of the dividend, and both the removal of board bonuses and the more recent cherry-picking of Lehman assets seems to vindicate their wish to make strategic commercial decisions themselves. On balance, the general market view remains that the shares are a hold.’
Carphone Warehouse half year results - 18 November 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘Carphone has today complied with investor requests, announcing its intention to consider a demerger of its telecommunication Talk Talk business from the retail electrical outlets.
Meanwhile, half year results have materialized broadly in line with analysts' estimates, whilst the accompanying outlook statement is highly cautious in tone. In addition, in an environment where concentration is now placed on a company's financial stability, management has moved to reassure investors with regards to its balance sheet strength.
All in all, 2008 has to date proved a transitional year for Carphone Warehouse - the growth in consumer spending which Carphone has benefited from has now evaporated, although the group has gained significant economies of scale via its joint venture with US electrical retailing giant Best Buy. Furthermore, a potential demerger of the telecom and electrical retail business may eventually enhance shareholder value, although management will be mindful of the fact that a subsidiary generating significant cash flow (Talk Talk) is a useful fit with a more cash challenged retail concern, such as itself. On balance, the market continues to give Carphone the benefit of the doubt, with the current market consensus opinion still positive in tone.’
BT half year results - 13 November 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
‘Following a recent disappointing trading update, BT management is now underlining its determination to cut costs in order to benefit from still escalating revenues (+4pc) – 10,000 jobs are to cut, 4,000 direct positions and 6,000 contracted and in some cases overseas jobs.
The group is effectively firing on three of its four cylinders, with the Global Services division currently disappointing. Sales to the division’s international customers have continued to progress, but management appears to have taken its eye off the cost base.
All in all, the group’s marked intention to improve profitability could see another turn in investor sentiment, this time upwards. In addition, potential changes to the group’s pension fund could help ease a major drag on the group’s shares, whilst a held half year dividend payment adds further attraction. On balance, with the general economic outlook still looking bleak, market consensus opinion currently denotes a hold rating.’
Taylor Wimpey trading update - 11 November 2008
Keith Bowman, Equity Analyst at Hargreaves Lansdown Stockbrokers commented:
'If further evidence were needed, today's update from Taylor Wimpey confirms the dire state of the UK and North American housing markets.
In the UK, the competitive vice has tightened further over recent weeks as rivals adopt more aggressive pricing policies. In addition, reservation levels have nosedived (-27pc) as negative sentiment surrounding property prices and soaring job insecurity concerns take their toll. In the USA, despite a 77pc reduction in the central bank base rate from a year ago (4.5pc to the current 1.0pc), sales rates have continued to decline against those achieved earlier in 2008.
All in the all, the situation remains bleak. Group debt of £1.9 billion is casting a very long shadow, the renegotiation of group banking arrangements continues to drag on, whilst management is now considering a further downgrade of its land bank and work in progress valuation. Current market consensus opinion continues to denote a sell rating'
Vodafone interim results - 11 November 2008
Richard Hunter, Head of UK Equities at Hargreaves Lansdown Stockbrokers, commented:
'If there is some disappointment surrounding the full-year revenue outlook, it seems that this was already reflected in the price. In the last year the shares have dropped some 40%, dispelling the notion that they should be regarded as a defensive stock. Indeed, given the magnitude of their free cash flow and acquisitive strategy, there could yet be an argument that Vodafone has qualities of a continuing growth stock.
In general, the numbers and accompanying statement are positive. Naturally there remain challenges around the wider economic picture, and growth in some of the emerging market areas has slowed, but the company nevertheless remain well placed to benefit from any uptick in economic fortunes. Meanwhile, the cost reduction programme is in full swing and the progressive dividend policy should help support the shares - at current levels, Vodafone is yielding 6.5% and is comfortably covered.
On balance, given the company's continuing aspirations, the general market view is tending towards a positive stance.'
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