Mindful Money’s Monday share tips

9th September 2013

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This week sees the FTSE 100 listed Kingfisher, Morrisons and Next update the market. We look at what stockbrokers are recommending writes Philip Scott.

Wednesday sees half year results arrive from B&Q owner Kingfisher. Over the past 12 months, its shares have surged 46%, and by 40% in the past six months alone, in part boosted by a further recovery in the UK housing market. The warm summer is expected to help the DIY retailer report near flat profits year-over-year. Pre-tax profit of £362m on a consensus basis is forecast, a 2.5% decline on last year says Keith Bowman, equity analyst, Hargreaves Lansdown Stockbrokers.

He says: “Accompanying management comments in relation to the health of consumers potentially provide a point of interest, whilst the board may again update investors with regard to its ‘Creating the Leader’ self-help plan, having recently entered Romania, its first new country in seven years.”

In all and prior to the update, analyst opinion according to Bowman currently points towards a strong ‘hold’. Share data website Digital Look, has the brokers edging towards a ‘buy’ recommendation while Sheridan Admans, investment research manager at The Share Centre, like Bowman has Kingfisher rated a ‘hold’.

He says: “Good weather this summer and favourable comparisons to last year should see relatively good numbers for second quarter sales and earnings. Investors will seek the management’s views and the likely impact on sales of a recovering UK economy and positive data from Europe. Updates on new store openings from its Screwfix business will be welcome.”

Morrison supermarkets report their half year results on Thursday. Aided by both pricing and marketing initiatives, recent industry data suggests that a further improvement in the rate of falling like-for-like sales should be reported. Over the past 12 months its shares are flat and during the last six months, they have edged up 11%. The broker consensus on Digital Look, is ‘neutral’ towards the shares while Admans is calling a ‘hold’. For its part Hargeaves Lansdown Stockbrokers has the broker opinion ahead of the results pointing to a ‘sell’.

Bowman says: “First quarter like-for-like or same store sales fell by 1.8% (2.6% including fuel), with the group’s still comparatively small convenience store chain considered a hindrance. Pre-tax profit is expected to decline by 10% to just over £400m. Nonetheless, management is expected to update on current initiatives, including its previously announced partnership with online delivery company Ocado and on-going convenience store openings.”

Fashion chain Next has enjoyed a 41% share price gain over the past and 21% the last six months. Digital Look’s broker count has the shares pointing towards a ‘neutral’ stance but investors will expect to see good sales figures reflected into the underlying profitability from this update as the period covers the decent summer we have had this year says Admans, who has labelled the stock a ‘hold’. He adds: “Investors will also be expecting commentary on the health of the UK retail market and an update on sales guidance for the full year.”

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