Mindful Money’s weekly shares watch: Prudential, G4S & Interserve

10th August 2015


Tuesday sees Prudential deliver its half-year results and shareholders are anticipating more upbeat figures from the insurer.

The FTSE 100 constituent has enjoyed a 15% share price rise over the past year and the broad outlook appears to remain positive however challenges still remain.

Graham Spooner, investment research analyst at The Share Centre says: “There are some areas of concern such as regulatory changes affecting the retail annuity market and a possible slowdown in its important Asian operations.”

But despite any potential headwinds Spooner is still calling the firm a ‘buy’ and is keen to hear about its performance in America and the UK.

Keith Bowman, equity analyst at Hargreaves Lansdown Stockbrokers expects that ongoing strength in Asia should partly offset any slowing annuity sales in the UK, on the back of the new pension freedoms.

He adds: “Both earnings and the dividend payment are expected to grow by around 10% year-over-year. Prior to the news announcement and with the company targeting the middle class in Asia and the retiring US baby-boomers, analyst consensus opinion continues to point towards a ‘strong buy’.”

Security giant G4S follows-up with its own set of half-year results on Wednesday.

A ‘buy’ for Spooner, the wider opinion is however, slightly less confident and while its stock may have firmed by 7% over 12 months, over the past six G4S’s shares have eased by 4%.

Bowman forecasts that the company, which employs over 620,000 personnel, may again see revenue growth for its emerging markets and North American businesses lead those generated in the UK and Europe.

He says: “Plans to sell further businesses could be outlined, whilst news of any contract wins for its still significant customer, the UK government, would likely prove well received by investors. In all, and with reputational damage following the Olympics fiasco pitted against new management strategy and expected long term emerging market growth, analyst consensus opinion currently points towards a ‘hold’.”

Following an upbeat trading statement issued only a month ago, Wednesday also sees Interserve publish its interim results, and investors will no doubt be hoping for more bullish sentiment from the UK based support services and construction business.

Over six months it has witnessed its stock firm by a solid 16% and Spooner, in-line with the wider broker consensus has the shares on his ‘buy’ list. He says: “The only area of moderate concern is in the UK construction business so any comments about that will be closely followed by the market.

“Prospects for the group’s future workload, in particular any signs of a return to business as usual by the government following the general election, will also be a major focus for investors.”


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