The Week Ahead: Stagecoach and HMV

Published in Investing on 24 June 2011

Retail news from Carpetright too, and results from telecom tiddler Daisy.

On Tuesday next week, we're expecting full-year figures from Carpetright (LSE: CPR), and we'll get to see just how much the seller of floor coverings has been hit by the downturn in the retail sector.

An interim statement in April showed things down across the board, with higher raw materials costs adding to the woes of falling sales, and analysts are currently forecasting a 45% fall in earnings per share this year. The dividend is expected to be maintained at a yield of around 2% after having been slashed last year, though that will be barely covered.

On the same day, we'll get annual results from tiny telecoms company Daisy Group (LSE: DAY), whose share price has risen nicely this month in anticipation. Providing a combined package of voice, data, broadband, telephony, etc, with maintenance and support, to small and medium sized businesses, Daisy is expected to turn in a maiden profit after its first few years of losses, after reversing into Freedom4 Group in mid 2009.

Analysts are forecasting EPS of around 9.5p this year and 13p next, for P/E ratios of approximately 12 and 9 respectively. I was reasonably optimistic about Daisy when I looked at the company at the end of 2009, opining that we'd really need to see the first year of profits to really think about valuation -- and that has now arrived.

Travel and software

Stagecoach Group (LSE: SGC), the bus and rail operator, will release results on Wednesday, after April's upbeat trading statement indicated decent like-for-like revenue growth across the company's divisions. Current forecasts are suggesting EPS growth of around 20% this year, and even though the shares have climbed from a low point of 104p in 2009 to near the 250p level today, that still puts them on a P/E of a fairly modest 11.

Preliminary results from mobile phone and travel software specialist Anite (LSE: AIE) are due on Wednesday too, and we're expecting a bounce back to form. After several years of sliding profits, culminating in a big slump last year, a threefold rise in EPS is forecast by analysts. That would take it back close to previous levels, with further growth predicted for 2012. Those looking for a recovery punt might be a bit too late though, as the share price has already triple bagged from its low point in 2008, and has more than doubled in the last 12 months.

Music and boozers

Thursday brings us full-year results from HMV (LSE: HMV), the struggling music and video shop that has recently had a last-minute reprieve from its bankers, as they hammered out a new, but very expensive, debt package.

The exact details of the results probably won't mean a great deal -- just "bad" is probably all we'll need to know about them, and we're guaranteed zero dividend as part of the bail-out conditions. What we should be looking for is details of HMV's plans to get rid of loss-making stores and turn the company back to decent profits, so that it will be able to survive beyond the end of the current loan arrangements.

Brewer and pub manager Greene King (LSE: GNK) will also give us annual results on the same day, and they're expected to be pretty flat. But while other pub chains have suffered with falling profitability and growing debts over the past couple of years, Greene King has kept on going fairly steadily. Debt, which stood at £1.3bn at the last year-end and which exceeds the company's £1bn market capitalization, is still high, but it's been falling for the past two years. And Greene King has been paying a well-covered dividend each year, expected to provide a yield of around 4.6% this year.

Notable announcements next week:

Monday: Cohort

Tuesday: ACM Shipping Group, Carpetright, Daisy Group, Porvair

Wednesday: Anite, Ishaan Real Estate, Stagecoach Group, Senior

Thursday: European Nickel, Flybe Group, Greene King, Hampson Industries, HMV Group, Northgate, ReNeuron Group, Petrofac, European Investment Trust

Friday: Goals Soccer Centres, John Wood Group

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