Tuesday preview: Thomas Cook, Wolseley

28th Mar 2011 18:08

Thomas Cook is the first of the two big travel companies to bring out trading updates this week and it is fair to say that events in 2011 so far have not been kind to them. Thomas Cook noted in its first quarter statement that the political unrest in Tunisia and Egypt would have an impact on the following quarter's profits of around £20m, and analysts will be interested to see whether this figure has grown in the interim."We think that the geopolitical and economic backdrop will remain unfavourable, and negatively impact sentiment towards the tour operators. Industry data suggests that trading has slowed in the UK, but remains robust in Germany," said Panmure Gordon, which has a "hold" recommendation on the stock and a 203p price targetBuilders merchant Wolseley expanded like a maniac prior to the US housing slump, whereupon it downsized itself as fast as it could to reduce gearing during the credit crunch.Things have stabilised now and Charles Stanley is expecting a strong set of interim results, with underlying profit before tax more than doubling to £230m from £112m the year before. Last year's interim results were chock full of exceptional items, amortisation of intangibles and other items that get accountants excited, the broker noted. "This year, Wolseley should present a clean and strong set of numbers and hopefully the balance sheet will show further deleveraging to pave the way for a dividend payout," Charles Stanley said. The broker thinks a 12p dividend could be on the cards."In the first half, the main improvement in profitability is coming from the North American market and the UK division. In the US, demand in Residential and RMI [Repair, Maintenance and Improvement] markets continued to improve though Commercial sectors remained subdued," Charles Stanley analyst Tony Shepard wrote. "The UK profit has advanced on the back of 5% LFL [like for like] revenue growth, disposals and a lower cost base. Although new build and commercial markets remain subdued, about 40% of Wolseley's revenues are RMI based and these continue to provide enough growth momentum for the group to improve its financial results," Shepard reckons. "Furthermore, the group continues to benefit from cost efficiencies," Shepard added. Charles Stanley has an "accumulate" rating on the shares. Andy Brown of Panmure Gordon retains his cautious stance on the shares, at least for now. "First quarter results from the group were good, and recent competitor data has suggested further stabilisation in trading. The US market remains the big swing factor in terms of investor sentiment. The shares have had a good run, so a strong set of results is needed to move the price up further," Brown reckons. INTERIMSEpiStem Holdings, Ultimate Finance Group, WolseleyQUARTERLY EX-DIVIDEND DATEDow Chemical Co, Yamana Gold Inc.INTERNATIONAL ECONOMIC ANNOUNCEMENTSHousehold Spending (JPN)Jobless Rate (JPN)Retail Sales (JPN)Small Business Confidence (JPN)Balance of Payments (GER) (07:00)Consumer Spending (FRA) (07:45)Consumer Prices (GER) Consumer Confidence (US) (15:00)FINALSAFI Development, Augean, Breedon Aggregates Ltd., Brightside Group, Corac Group, Faroe Petroleum, Gresham Computing, Hochschild Mining, InternetQ, IQE, Kazakhmys, Nationwide Accident Repair Services, Phoenix Group Holdings (DI), Powerflute Oyj (DI), Real Good Food Company, Scisys, Toumaz Ltd., Vindon HealthcareANNUAL REPORTAviva, Coca-Cola Hellenic Bottling Company SA, Gresham Computing, StatPro GroupEGMSLecico Egypt SAE GDR (Reg S)AGMSHelius Energy, Horizonte Minerals, Lecico Egypt SAE GDR (Reg S), Low Carbon Accelerator Ltd., Temple Bar Inv Trust, United Bank Ltd. GDR (Reg S)TRADING ANNOUNCEMENTSBabcock International Group, Man Group, Thomas Cook GroupUK ECONOMIC ANNOUNCEMENTSBalance of Payments (09:30)Current Account (09:30)GDP (quarterly national accounts) (09:30)Mortgage Approvals (09:30)M4 Money Supply (09:30)FINAL EX-DIVIDEND DATEMitsubhi Electric Corp.- - -jh