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Next week on the stock market

What to expect from a selection of FTSE 100, FTSE 250 and selected other companies reporting next week.

Important notes

This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

Among the companies reporting next week;

  • Keywords' valuation means there’s a lot to live up to in its full year results.
  • The outlook statement’s the thing to watch at Compass.
  • We’ll get a sense of how accurate forecasts have been at United Utilities.

FTSE 100, FTSE 250 and selected other stocks scheduled to report next week

Centamin Full Year Results
Kingfisher Full Year Results
Elementis Full Year Results
Softcat Half Year Results
Bellway Half Year Results
Diploma Second Quarter Trading Statement
Halma Full Year Results
Keywords* Full Year Results
Cineworld Full Year Results
Compass Group* Half Year Trading Statement
International Public Partnerships Full Year Results
United Utilities* Pre-Close Trading Statement
Smiths Group Half Year Results

*Companies on which we will be writing research.

Keywords – Sophie Lund-Yates, Equity Analyst

Keywords is one of the few companies whose operations benefitted from the pandemic. The popularity of computer games boomed with other leisure activities closed, and Keywords is expecting to deliver full-year organic revenue growth of 12%.

Margins will be top of mind. That’s been a key strength for Keywords so far. Some of those savings could be pandemic-related, though, and we’re keen to see whether management expects its profitability to fall as things return to normal.

Another big question mark is how the group’s acquisitions are fitting into its existing portfolio. Since May, the group’s brought seven new businesses under its umbrella, and while we believe they weren’t overly expensive, we’d like more detail as to how and when they’ll pay off.

Perhaps the most important thing to watch when Keywords reports, though, is how the market takes it. The group is in a strong position to capitalise on the rise of gaming. But the market is clearly excited by the prospects too - its price to earnings ratio of 38 is some way above its all-time average. That means investors are expecting big things and merely meeting expectations may not be enough to support that valuation.

See the Keywords share price, charts and how to deal

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Compass – Sophie Lund-Yates, Equity Analyst

As a contract catering company, Compass is very much relying on people returning to offices, stadiums re-filling and schools and universities re-opening. It’s only a trading statement next week so we’re unlikely to get profit figures, but we’ll be watching closely for what rising Covid cases in the USA and Latin America meant for Q2 revenue.

For the half year as a whole, we would expect some recovery from the first quarter. Organic revenue fell 33.7% in Q1, which was in-line with management’s expectations. We’ve seen some easing of restrictions since then. We’ll also be interested to see how well the more resilient Healthcare and Military businesses have held up.

Any guidance will be read with interest. Some of the group’s end markets have changed forever because of the pandemic. We’d like to know thoughts on what increased working from home and virtual learning could mean over the long-term.

See the Compass share price, charts and how to deal

United Utilities, Sophie Lund-Yates, Equity Analyst

United Utilities has spent this year dealing with both the pandemic and a tougher regulatory regime. As a result, when the group released its half year results in November, full year revenue was expected to be between £1.75bn and £1.80bn, compared with £1.86bn in 2020. It was also expecting higher underlying operating costs thanks to small inflationary increases in some core costs and higher spending on infrastructure renewals.

Put the two together and it’s reasonable to expect lower profits for the year. Underlying operating profit was down 18.5% in the first half, and analysts are expecting something in the region of £570m for the full year, compared with £743.9m in 2020. In the corresponding March trading statement last year United Utilities didn’t give precise figures, but the language will likely give us a sense of how accurate these forecasts are.

We’ll also be looking closely at commentary on business demand, which has struggled during lockdowns, and bad debts as some customers have struggled to pay during the pandemic. Both will be important as we recover from the pandemic and life begins to normalise.

See the United Utilities share price, charts and how to deal

Sign up to receive United Utilities research direct to your inbox

Unless otherwise stated estimates are a consensus of analyst forecasts provided by Refinitiv. These estimates are not a reliable indicator of future performance. Past performance is not a guide to the future. Investments and income they produce can rise and fall in value so investors could make a loss.

This article is not advice or a recommendation to buy, sell or hold any investment. No view is given on the present or future value or price of any investment, and investors should form their own view on any proposed investment. This article has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is considered a marketing communication. Non-independent research is not subject to FCA rules prohibiting dealing ahead of research, however HL has put controls in place (including dealing restrictions, physical and information barriers) to manage potential conflicts of interest presented by such dealing. Please see our full non-independent research disclosure for more information.

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    Important notes

    This article isn’t personal advice. If you’re not sure whether an investment is right for you please seek advice. If you choose to invest the value of your investment will rise and fall, so you could get back less than you put in.

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