Equity Briefing: Berkeley Group, Joules Group and IHS Markit
Berkeley Group will report full-year results covering the 12 months to the end of April this morning.
Berkeley shares have significantly underperformed the wider market over the last year, trading up just 2% compared to the 26% rise in the FTSE 350 Construction & Building Materials index. That comes despite the housing sector remaining resilient during the pandemic, with construction allowed to continue during lockdown and the market buoyed by the Stamp Duty holiday.
This is in part because Berkeley has greater exposure to London at a time when people are leaving cities, which has caused a drop in reservations and bookings. Plus, there are concerns that its decision to delay some of its projects until the economy reopened could now cause problems as reports build that materials and labour are harder to get hold of and more expensive.
The housebuilder said in February that benchmark pretax profit should be largely in-line with the £503.7 million reported in the last financial year, but analysts are expecting Berkeley to surprise with a profit of £516.5 million. Still, that will be considerably lower than the £775.2 million booked in 2019.
Berkeley has committed to returning £280 million per year through dividends and buybacks and has done so since 2016.
Joules Group will release a pre-close trading update for the full-year to the end of May today.
The clothing and homewares company revealed in early May that revenue would come in higher than the £187 million expected by analysts and that pretax profit before exceptional items would beat the £4.1 million forecast.
That provides hope that revenue could still grow from the £190.8 million delivered in the previous year and any profit will be welcomed considering it booked a £2 million loss the year before.
It has proven resilient during the pandemic thanks to its online sales and results have also received a boost from the acquisition of homewares firm Garden Trading Co in February, while store sales have picked-up since being allowed to reopen in April.
The focus will be on the outlook now that things are starting to normalise and when Joules Group’s results can return to pre-pandemic levels.
Later today, before US markets open, IHS Markit will release second-quarter results covering the three months to the end of May.
The company, which deals in providing critical information and data analytics, said it had made a positive start to the year when it released first-quarter results in March as it started to see a strong recovery in its end markets, enough so that it said full-year results would be at the upper end of its guidance ranges.
Analysts are expecting revenue to rise to $1.135 billion in the second quarter from $1.027 billion the year before. Adjusted Ebitda is expected to rise to $505.7 million from $454.0 million while adjusted EPS is forecast to increase to $0.8 from $0.69.
Notably, IHS Markit is currently in the process of merging with S&P Global under a $44 billion deal struck last year, which is expected to be completed before the end of 2021.
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