Next week on the stock market

Among those currently scheduled to release results next week:

• We’ll see if inflationary tailwinds have helped Microsoft as planned
• CVS Group will let us know if the UK pet boom still has room to run
• Diageo looks to push on with its recovery

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

*Events on which we will be updating investors.

Microsoft – Sophie Lund-Yates, Equity Analyst

Back in the first quarter, Microsoft said it hoped to benefit from rising inflation. The logic being, as businesses sought to become more efficient as costs rise, they’d flock to Microsoft’s software products like its cloud-based computer power. Inflation’s certainly been running rampant, so next week we’ll find out if those expectations have become a reality.

The market’s hopes will be high, as it’s become accustomed to Microsoft’s stellar results. Last quarter, revenue rose 20% to $45.3bn, ignoring the effect of exchange rates, which was faster than market expectations. There was double digit growth in every division and group operating profit rose 24% to $20.2bn.

We should also get some insight into how it plans to further expand its metaverse, following news of the impending almost $70bn acquisition of Call of Duty maker, Activision Blizzard.

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CVS Group – Sophie Lund-Yates, Equity Analyst

CVS Group’s price/earnings ratio may have come down from the ten-year highs of last year, but at 24.5 the pressure’s still on to live up to expectations.

Sales rose almost 14% in the first few months of the financial year, partly thanks to the boom in UK pet ownership over lockdowns. We’ll be particularly interested to see how the fast growing virtual vet pharmacy has been doing. Puppies and kittens tend to need the most attention when they’re very young, so if the pet-boom has slowed, we wonder if like-for-likes have started to temper at all.

The final thing is vacancies. The biggest risk for CVS and vets in general, is a shortage of qualified vets. The group’s done a lot to help keep retention and vacancies at acceptable levels, but it’s something worth keeping an eye on.

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Diageo – Matt Britzman, Equity Analyst

A price to earnings ratio of 26.0 means markets will be expecting good things in the upcoming half year results. Analysts are expecting net sales to rise in the region of 13.2%, to £7.8bn.

Management warned of near-term volatility in their previous full-year results. With inflationary pressures pushing costs up, we’ll be looking out for any impact on operating margins.

Following periods of hefty restrictions, the return of customers to bars and restaurants should be positive for the on-trade sales numbers. Although, in light of Omicron developments, it’ll be interesting to see how much of an impact this has had on recovery.

The balance sheet looked in good shape last year. Debt had been creeping higher than we’d like but it was pleasing to see net debt coming down in more recent results. We’re hopeful that can come down further if profits continue to move in the right direction.

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