Mindful Money’s weekly shares watch: Sports Direct International, Ashtead & Whitbread

7th December 2015


After delivering an upbeat first quarter trading update in September shareholders in Ashtead will be hoping to hear the momentum has continued when the group publishes its interim results this Wednesday.

The firm’s stock is down by 8% over the past six months but Graham Spooner, investment research analyst at The Share Centre, inline with the wider market consensus, currently has the international equipment rental company on his ‘buy’ list.

Looking ahead to this week’s update, he says: “Trading in both the US, where it derives most of its earnings, and the UK has been good so far this year. With the recent Autumn Statement providing a boost for both housebuilders and the infrastructure sectors the market will be hoping for positive comments from the company on prospects for the UK business.

“Ashtead has some limited exposure to the oil sector in the US so any comments on whether that is proving a headwind at present will be of interest to investors.”

Costa and Premier Inn owner Whitbread, also off 8% over the last six months, is scheduled to announce its third quarter trading update on Thursday.

The announcement, will be the first under its new chief executive Alison Brittain and Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers expects that its budget hotel arm is likely to report “a robust performance”.

He says: “Assisted by the Rugby World Cup, industry measure, Revenue Per Available Room (RevPAR), is forecast to be in the region of 5%, with an increase in rooms available further contributing to total sales.

“For its Costa Coffee business, UK like-for-like sales are expected to have remained strong, although performance for its European business may have been hindered by the recent tragic events in Paris.”

Prior to the release, and with the group appearing to remain on track to meet its own growth targets, analyst consensus opinion points towards a ‘buy’.

Thursday also sees Sports Direct International report its half-year results.

Spooner, who is calling the shares a ‘buy’, says: “While the figures for sales and profits for the six months up to the end of October will be of interest, the main interest will be in any comments about sales on Black Friday and prospects for the key Christmas trading period which is now well underway.”

He adds that investors will also be looking at the retailer’s recent acquisition of a 19% stake in smaller catalogue seller Findel and its proposal to appoint a director to the board.

“Sports Direct has previously forecast full year profit of £420m, so the market will also be keen to hear if that remains the expectation, along with any news on the level of online sales,” says Spooner.

Bowman, adds that an update regarding the roll out of large format city centre stores and the expansion of its National Distribution Centre may be forthcoming.

He says: “Reference to the impact of the new National Living Wage could also be included.

“Ahead of the update and with the company’s expansion in the UK, Europe and online all ongoing, analyst consensus opinion currently signifies a ‘buy’.”

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