Three must watch UK Stocks – Stagecoach, DS Smith & Berkeley Group

Connor Campbell, Financial Analyst at Spreadex, highlights three UK Stocks that traders will be watching this week, as they all update the market on recent performance.

Stagecoach

half year on Wednesday – seeing buying, but sellers since it hit £1.80
– 8 year lows in mid-September
– FY June – due to a one-off costs and impairment charges related to the East Coast rail franchise – which Stagecoach, who owns 90% of the line to Virgin’s 10%, claims won’t be profitable until 2019 – pre-tax profit plunged a nasty 83% to just £17.9 million – even when charges stripped out pre-tax profit still fell 15% to £158.7 million
– Q1 September – while like-for-like UK bus revenue fell 0.1% in London and was down 0.4% in the rest of the country, UK rail sales (excluding South West Trains, the contract for which Stagecoach lost in March) jumped 3.8% with a 4.4% increase at Virgin Rail Group (of which Stagecoach owns 49%)
– Joint public and private sector East Coast Partnership from 2020 means the East Coast franchise contract will be terminated 3/4 years early + shortlisted to run HS2 High Speed rail link

DS Smith

half year on Thursday – seen heavy buying around £5.40
– FY June – revenue 18% higher to £4.78 billion, with a 31% surge in pre-tax profit to £264 million
– Big news, however, was that it had bought an 80% stake in paper and corrugated packaging firm Interstate Resources for £722 million (with the option to snaffle up the other 20% in 5 years’ time), a move that saw the company take its first step into the US market
– September update – had seen an ‘encouraging start to the year’ and that progress with its ‘pan-European and e-commerce customers was particularly strong’
– October update – claimed volume had been ‘consistently very strong’ throughout the half year period, expects to complete its mid-October acquisitions of EcoPack and EcoPaper in Romania in Q3
– Sales to jump 10% to £2.6 billion, operating profit to rise 7% to £240 million

Berkeley Group 

– half year on Friday – largely buying around £37.50
– FY June – 53% surge in pre-tax profit to £812.4 million plus a 33% jump in revenue to £2.7 billion
– Q1 September – while it said it was on track to ‘deliver at least £3 billion of pre-tax profit in the 5 years ending 30th April 2021’, it did warn that the London market was still struggling under the weight of Brexit uncertainty and the impact of the stamp duty changes
– Barclays downgrade – ‘expectations may have run ahead of themselves’ in the sector as a whole
– Autumn Budget – despite £44 billion worth of pledges, claim that compulsory purchase powers may be introduced to take back land from developers who refuse to build for commercial rather than practical reasons spooked the sector
– Investors will ideally want to see the same kind of explosive growth posted back in June

Further Information:

You can see more of Connor Campbell on Core Finance talking about GBPUSD and FTSE.

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