Mindful Money’s Monday share tips: M&S, Burberry, Royal Mail, SABMiller & Booker

19th May 2014


Marks & Spencer shareholders are hoping to be cheered by not only an improvement in sales but positive updates on the retailer’s online and overseas drive when it reports its full year results on Tuesday.

With its shares up by just 3% in the past 12 months, profit guidance for the current financial year will head the agenda.

However in light of its recent April update, few surprises are expected and Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers notes that pre-tax profit year-over-year is forecast to decline by around 7% to £617m on a consensus basis.

He says: “Prior to the announcement and with the current chief executive and former head of Morrison’s still being given the benefit of the doubt, analyst opinion currently points towards a ‘strong hold’.

Wednesday sees fashion retailer Burberry publish its fourth quarter results and while the all-important Chinese market has proved a tougher customer of late, investors will be hoping to hear how the incoming chief executive Christopher Bailey plans on taking the company forward.

The business, famous for its check designs has witnessed its stock edge up by 6% in the past year, and the market consensus has the shares in ‘neutral’ territory with analysts at Barclays having just reiterated an ‘equal-weighting’ recommendation.

Sheridan Admans, investment research manager at The Share Centre, who rates the stock a ‘buy’, says: “Key areas to address will be the termination of the Japanese licence, the progress of the beauty business, management changes and the impact of an appreciating sterling.”

Grolsch and Peroni owner SABMiller, down 11% over the past year, reports its full year results on Thursday. As noted by the drinks giant in its last trading update, the depreciation of key currencies against the US dollar will impact the results.

Bowman says: “Challenging conditions in parts of Europe, such as Poland, have also hit over the course of the year. Pre-tax profit year-over-year is expected to decline by around 14% to $4.8bn on a consensus basis. Ahead of the results, and with the company still expected to benefit from longer-term growth in the emerging markets, analyst opinion currently points towards a ‘strong hold’.”

Thursday also sees Royal Mail deliver its own update. The report should contain its first dividend since coming to the market in October last year, when it was sold off for 330p per share. Since then its shares have jumped some 73% to circa 572.5p today, causing many to accuse the Government of allowing the group to be sold off far too cheaply.

Admans, in line with general broker sentiment rates the shares a ‘hold’. He says: “Investors who have not cashed in will be concentrating on the groups restructuring plans, notably its cost cutting. Other areas of interest for investors will be comments on the Ofcom investigation, parcel growth allied to letter decline, competition and property assets.”

At the same time the FTSE 250 listed cash and carry firm Booker, up 13% in the past year, deliver its fourth quarter update. With the broker consensus positive on the stock, investors will be keen to hear its outlook on its expectations for cash generation and future profits.

Admans, who rates it a ‘buy’, says: “With the recent rise in wages combined with inflation and food inflation falling, it will be worth noting if the group has benefitted. Investors will also be interested in how Bookers tentative expansion into the Indian market is progressing and its plans to develop in the region further. Income investors will be watching closely to see if Booker maintains its momentum in dividend hikes over recent reporting periods.”

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