Mindful Money’s weekly share watch: Persimmon, BHP Billiton, Home Depot & AGA Rangemaster

18th August 2014


With the UK’s housing market showing no real signs of dramatically cooling-off investors will be keen to hear how home-builder Persimmon has enjoyed the reinvigorated backdrop when it reports its half-year numbers on Tuesday.

Back in early July, the York-based FTSE 100 constituent reported a robust 33% increase in revenues to £1.2bn, with the average selling price up 4% to £186,000 and legal completions 28% higher at 6,408 new homes. While its shares have eased by 5% over the past six months, they are still 20% higher over the year on the back of the booming property market.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers said: “Pre-tax profit for the half year is forecast to have risen by around 46% to £197m, with current trading topping the agenda for investors. Prior to the announcement and with the company now committed to returning surplus capital to shareholders, analyst consensus opinion currently points towards a ‘cautious buy’.”

Tuesday also sees blue-chip miner, BHP Billiton, up 9% over the past 12 months, update the market with its fourth quarter results. The base metals specialist has already delivered a relatively positive production update for the past six months with some key commodities seeing rising production levels.

Ahead of the update Investec Securities and Liberum Capital are calling the firm a ‘hold’, while Nomura and Deutsche rate it a ‘buy’, in line with the market consensus according to Digital Look.

Sheridan Admans, investment research manager at The Share Centre, who is also tipping the stock as a ‘buy’, said: “As commodity prices in general have held up over the same time period, with some even seeing small increases, we expect a moderate uplift in BHP’s financial numbers. Asset write-downs still remain a possibility and management are likely to remain cautious on large scale investment projects.”

Across the water the world’s largest home improvement retailer Home Depot Inc, up 11% over the year, delivers its second quarter results. On Tuesday the Dow Jones listed DIY retailer, which operates over 2,200 stores, is likely to report a rebound in seasonal sales following a weather hit first quarter noted Bowman.

Bowman says: “Management may again reiterate its expectation for full year 2014 sales to rise by approximately 4.8% from 2013 levels, whilst Earnings Per Share in the region of $1.45 are currently expected, an increase of a little under 17% year-over-year. In all, and given both continuing management initiatives and the generally expected further recovery of the US housing market, analyst consensus opinion currently points towards a ‘strong buy’.”

Friday sees luxury kitchen cooker and appliance firm AGA Rangemaster deliver its second quarter numbers. Despite the FTSE Small Cap firm enjoying a 12 month share price rise of 40% – and a 10% six-month drop – the  broker consensus is pointing to a ‘strong buy’.

With a strong UK housing market and improving global economic environment, the company has experienced a good recovery in sales and investors will be looking for more of the same says Admans who is calling the stock a ‘buy’.

He added: “The new ventures into China and the targeting of the urban markets should provide extra sales channels. Investors will therefore be expecting improving numbers and look for management commentary on how new stores are performing.”

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