Mindful Money’s weekly shares watch: Wolseley, Sainsbury & Compass

28th September 2015


Wolseley reports its full year results on Tuesday and the plumbing giant’s exposure to the recovering US economy is expected to head-up the agenda.

The group’s third quarter update saw an increase of 25% in headline US revenue growth reported.

Keith Bowman, equity analyst at, Hargreaves Lansdown Stockbrokers expects that strength in the US dollar is likely to provide the numbers with a favourable tailwind, whilst further ongoing bolt-on acquisitions could be announced.

He says: “Group revenue is forecast to edge around 2% higher to £13.36bn on a consensus basis, whilst trading profit is expected to have grown by over 13% to £865m.”

The FTSE 100 constituent has enjoyed a firm 29% rise in its shares over the past 12 months and brokers are expecting more gains to come.

Bowman adds: “With the company exposed to growth in US construction markets and management previously placing a clear emphasis on shareholder returns, analyst consensus opinion currently points towards a ‘buy’.”

On Wednesday Sainsbury delivers its second quarter trading update to the market. Given the on-going price war in the supermarket sector Graham Spooner, investment research analyst at The Share Centre believes investors should not expect too many positives from the latest trading update.

Over the past three months, the retailer has endured a 17% drop in the value of its shares but for his part Spooner is calling the shares a ‘buy’.

He highlights that a recent report from Kantar should be welcomed “as it showed that Sainsbury were the only major supermarket not to lose market share to both ALDI and Lidl”.

Bowman adds: “Management may again underline its investment in price and quality, whilst likely progress for both its convenience stores and online sales could further feature.”

Prior to the update, and with the company’s differentiated offering set against falling profitability, the overall analyst consensus opinion currently points towards a ‘hold’.

Wednesday also sees Compass Group publish its fourth quarter trading update. Spooner anticipates that the market will be most interested in how trading in emerging markets is progressing at the global catering group.

In its last trading update, issued in July, which covered the third quarter, the group said that trading had been in line with expectations with good growth in North America, Europe and Japan; although there had been weaknesses in some emerging markets.

Spooner, who has the firm on his ‘buy’ list, says: “Given recent events and the poor economic data from China over the past month, investors are now revising their expectations for growth from many developing countries. The level of new contracts and any comments on profit margins will also be watched closely by investors.”

Over the past year the group’s stock has moved up by 9% and the consensus currently appears to have the group down as a ‘buy’, albeit a weak one.

1 thought on “Mindful Money’s weekly shares watch: Wolseley, Sainsbury & Compass”

  1. David Lilley says:

    Wolseley profits actually fell to £506m leading to a 12% fall in its share price today, 30th September 2015.

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