Friday Email: 25 July 2014

Every Friday morning our lead analyst Mark Riding sends out his weekly run-down and upcoming events in the investor calendar, like this one:

That was an interesting week as SSE went ex-dividend and Easyjet produced really solid numbers that with the guidance given by the company indicates an increase in pre-tax profit for this financial year of between 14% (£545m) and 19% (£570m). Given that the current financial year is almost over, we can look forward to the following financial year, which, if the analysts forecasts are correct, put them on a P/E of 10.4. With the strong cash generation and high dividend cover, we would expect these numbers to translate into more very good dividend increases both this year and next. There was a very small impact on the forecasts due to the situations in Egypt, Israel and Russia, but for me, its about how they are beating up the competition. So many of these airlines are in transition and yet Easyjet just carries on outperforming its peers, year in, year out. The market's reaction was to knock the share by over 5%, which looked a little harsh.

Glaxo produced its second quarter numbers and warned the market. The dividend was exactly as we expected and the dividend pattern still looks easily sustainable going forward. The shares were hit hard enough to see them retreat to a 52 week low and move into the top ten UK stocks in the Optimizer.

The week ahead is extremely busy as you can see from our financial calendar for the coming week with a lot of companies reporting each day. This coming week will help define this results season and provide us with a good idea of how the full year will pan out. The results that we have seen so far have not set the world alight so we will be hoping that next week will see a pick up and some beating of expectations. Those of you that have been following the performance of the FTSE 100 will notice that we have passed the 6800 mark again and next week, with some good numbers, we may see another challenge to the stubborn 6850-6880 resistance level that has proved so difficult to breach.


This email was originally sent on Friday 25 July 2014

The Friday email is delivered to over 20,000 subscriber’s every week, and remains a widely read run-down of recent events and what investors can expect in the week ahead written by our chief analyst Mark Riding.

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