Equity Briefing: AO World, AB Foods and Micro Focus

Online electricals retailer AO World releases preliminary results this morning, while Primark’s owner AB Foods and software giant Micro Focus will both release interim results. We explain what to expect before markets open today.

Stocks (2)

Want the latest news to come to you?

You can get the latest market-moving news and incisive insight sent straight to your inbox every day, including the Equity Briefing, by subscribing to receive our market commentary updates.

Click here to subscribe.

AO World

AO World, the largest online-only seller of white goods and electricals in the UK, will release preliminary results covering the 12 months to the end of March this morning after they were delayed to provide more time for the auditing process.

The company has come into its element during the pandemic as consumers were forced to shop for everything from fridges to tablets online whilst stores were closed. AO World has already revealed that revenue jumped 62% in the year to £1.66 billion, and revealed growth had accelerated in the fourth quarter to set it up for another year of growth.

The performance in the UK will be closely watched as lockdown rules have been eased and shops have reopened since the end of March, and investors will want to see evidence that people are still willing to buy big-ticket items online rather than in-store.

AO World has also provided a glimpse into what to expect in terms of earnings, with adjusted Ebitda set to soar to a range of £63 million to £72 million, marking a huge improvement from the £19.6 million booked the year before. Building on that guidance, analysts are expecting pretax profit at the bottom-line to jump to £40.1 million from just £1.5 million the year before and for EPS to soar to 6.24p from 0.38p.

Associated British Foods

AB Foods is due to release a trading update this morning to provide insight into how it has performed since it released interim results back in April.

Although demand for its food-based businesses has increased since the pandemic started, it has been more than offset by the steep decline in sales at Primark during lockdown.

The company’s trading updates only focus on revenue and the focus will be on how Primark, which lost out during the pandemic due to its lack of online presence, is performing now that stores are reopen and restrictions have relaxed. Its last update came just over a week after stores started to welcome customers back again in April, but the company said demand was already showing the ‘relevance and appeal of our value-for-money offering’.

Primark accounts for the bulk of earnings and is the driver of cashflow in normal times, so its recovery is key to returning AB Foods to growth. That is even more important considering demand its food-based business will soften in the second half.

Micro Focus

Micro Focus will release interim results covering the six months to the end of April later today, at around 1230 BST.

The company, which provides enterprise software to businesses and organisations around the world, has already revealed that revenue fell 5% at constant currency to $1.4 billion. Strong growth in licensing, partly thanks to weak comparatives from being disrupted by the pandemic last year, was countered by declines in revenue from maintenance and consulting work, as well as a fall in recurring revenue from its Software-as-a-Service unit.

Analysts are expecting adjusted Ebitda to drop to $502.0 million from $552.2 million the year before.

Today will also see new chief financial officer Matt Ashley, who has previously worked as CFO at William Hill, take up his role on the board.

Investors will also want to hear more about its new long-term partnership with Amazon Web Services and how its recovery is progressing, with Micro Focus aiming to stabilise revenue and generate sustainable cashflow.

How to trade top stocks

You can trade a variety of stocks with City Index by following these four steps:

  1. Open a City Index account, or log-in if you’re already a customer.
  2. Search for the company you want to trade in our award-winning platform
  3. Choose your position and size, and your stop and limit levels
  4. Place the trade 

More from Equities

Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.