LONDON (ShareCast) - Dixons is due to report its preliminary results on Thursday 21 June. Consensus expects pre-tax profits to be in the range £65m to £70m and Panumre Gordon analysts are at the top
The company has already reported fourth quarter sales, which showed an “encouraging” improvement in the UK (+8% like-for-like sales growth), while Northern Europe was also strong (+10% like-for-like sales growth), Southern Europe was, as expected, poor (-10% like-for-like sales growth) and PIXmania is turning out to be a real drag on profits, they add.
Nevertheless, Panumre Gordon comments that, “Dixons is becoming less of a binary situation and more of a recovery story. We believe that the company is improving its product, its stores and its operations, and that it will repay its bonds this year. The latter belief has been reinforced by the recent signing of a £300m revolving credit facility, which effectively extended its previous agreement. On their new estimates, the price to earnings ratio falls to 10x for the year ahead and 5x in the year after. BUY, they say.
“We expect Aggreko to deliver further, high margin predictable growth over the medium term – and that isn’t a phrase we can use writing about too many other companies out there,” write analyst at ,Panmure Gordon this morning about the temporary power provider.
Backing up those expectations, they say, is the good order intake in international power projects (IPP), which has led the company to ramp up capital expenditure plans for the year – a great indicator for confidence and potential for 2013.
The company’s expectations for the year, nonetheless, are unchanged, with a tougher trading environment seen in the second half. For that reason, Panmure explains, it leaves its recommendation as Hold.
In a research note published this morning analysts at Nomura comment that the pub sector has suffered from the perfect storm of long-term wet-led decline, short-term pressure on UK consumer spending and investor aversion to high leverage. For that reason they are cautious on the overall consumer environment, but believe that in an unloved part of the leisure sector there are certain companies providing exposure to structural growth in the casual dining market at attractive valuations.
Whitbread, however, remains their top pick because of the growth potential in the Premier Inn and Costa brands, their expectation of an improvement in revenue per average room trend from the third quarter and the potential for a re-rating of the Costa business where we expect growth of circa 20% in earnings before interest and taxes.
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