Next week on the stock market

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

• boohoo will offer insight into its hotly anticipated supply chain review
• With stores back open will Greggs return to profit territory?
• Halma seeks to prove its exceptional quality justifies an exceptional price

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

*Companies on which we will be writing research.

boohoo – Sophie Lund-Yates, Equity Analyst

boohoo’s been grappling with scandal. News of labour abuses at one of its suppliers in Leicester rocked the boat back in July. Next week’s half year results will offer further details on the hotly anticipated supply chain review. This could include details on plans to combat the possibility of a reoccurrence, which could see boohoo spending more heavily than the initial £10m pledged. And thinking of spending more generally, we’ll be looking to see if full year capital expenditure (capex) targets have been raised again. These were raised to £60m - £80m, compared to £45.6m last year. Spending on expansion isn’t a bad thing, but mushrooming capex isn’t something we would usually view with total positivity.

But away from this, it will be important to keep an eye on the core business. In particular we’ll be expecting to see another run of impressive sales growth – the likes of which boohoo’s valuation demands. In the first quarter revenue rose 45%, which encompassed an 83% rise in the key US market. Of course, there’s a chance July’s mishap could have hurt the brand more severely than we’ve anticipated – which could see sales stutter in the second quarter.

Underlying cash profit margins are expected to be 9.5 – 10% for the full year, but this is contingent on conditions. If the group’s been forced to discount prices more than expected, these goal posts could move.

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Greggs – Emilie Stevens, Equity Analyst

Greggs was closed for a significant chunk of its first half which made for unsavoury headline results. Revenues were down 45% at just over £300m and with costs relatively fixed, the group made an operating loss of £62.2m, down from £39.9m profit last year.

Roll forwards to July 28 however, and shops had reopened, with most seeing sales around 70% of last year’s levels – so third quarter results should look a bit different. How different will depend on how quickly trading patterns have improved. The group needs to operate at 80% of 2019 sales to breakeven.

Further lockdowns are a real risk but thanks to an acceleration of some digital innovations, Greggs looks better prepared. Click and collect is being rolled out nationally and should allow for a more efficient socially distanced service.

See the latest Greggs share price, charts and how to trade

Halma – Nicholas Hyett, Equity Analyst

Halma managed to deliver a 17th consecutive year of record profits in the year to the end of March – with organic sales up some 5%.

While coronavirus has inevitably had a knock on effect since, sales only dipped 4% in the first quarter of the new financial year. Headwinds are expected to mount over time – with profits down 5-10% in 2021 - but all things considered that would be a pretty impressive result.

However, you wouldn’t know that Halma was set to break its run of record profits from the share price. At 40.2 times earnings, the Price Earnings ratio is close to the highest it’s ever been (with the all-time high of 41.4 reached on the 16 September this year). For us that makes investing in the company a real challenge – despite its exceptionally high quality.

It’s difficult to see how Halma can change that assessment for the better next week.

See the latest Halma share price, charts and how to trade

Unless otherwise stated estimates are a consensus of analyst forecasts provided by Thomson Reuters. 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.

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