Tuesday preview: Whitbread, GKN, Serco, Persimmon

27th Feb 2012 18:55

Tuesday will be the day to wake up and smell the coffee as Costa Coffe chain owner Whitbread issues a trading update at 7:00am.Whitbread is not just about Costa Coffee, however; it also owns pub restaurants such as the Beefeater chain, not forgetting the Premier Inn hotels chain. It is the latter which Credit Suisse thinks might prove a disappointment, because of revenue per available room (RevPAR) trends in the hotel business in the UK."We are cautious ahead of the pre-close update given a backdrop of subdued UK RevPAR trends that we believe will cause consensus expectations for FY12/13 [fiscal 2012/13] to be revised lower. UK RevPAR (including a 15% London weighting) in the last 12 weeks has turned negative and is trending 290 bps [basis points] lower than during Whitbread's Q3 [third quarter] when Premier Inn's LFL [like-for-like] growth was 2.6% and RevPAR growth 1.4%," Credit Suisse said.There are 100 basis points to a full percentage point."Whitbread's growth out-performance vs the market has slowed from +580bps in FY09-FY11 to just +130bps over the last 3 quarters - as such our 1.5% Q4 LFL might be missed but more important is the risk to FY13 expectations where our -2% RevPAR assumption leaves our EPS [earnings per share] estimate 7% below consensus," the Swiss broker added. For the fourth quarter, Credit Suisse is forecasting forecast Costa to grow 7% LFL and Whitbread's pub restaurants by 1%.Nomura is another broker braced for a soft fourth quarter for Whitbread. It is expecting a further slow-down in Premier Inn's RevPAR; indeed, it thinks it will show a 0.2% year-on-year decline versus the 1.4% improvement seen in the third quarter."However, this is widely known by investors and reflects market data, which in recent weeks have averaged -1%, with the midscale/economy segments lagging behind," Nomura observes.The Japanese broker's fourth quarter forecast for LFL sales is 2.3% for pub restaurants and 2.5% for Costa. Automotive and aerospace engineer GKN releases full year results covering 2011. The market consensus forecasts are for revenue of £5,822m and profit before tax of £408.4m. Earnings per share are expected to edge up to 21.66p, underpinning a predicted increase in the full year dividend of 6.88p.Charles Stanley thinks the focus of attention will be on future visibility, as the figures for 2011 are unlikely to spring many surprises following the group's mid-October trading update."The reporting season amongst GKN?s US end market operators [in the aerospace and defence markets] has seen a theme of companies finishing 2011 well, but uncertainty and reduced confidence around 2012. With national budgets under pressure to find savings and the defence element tending to represent a large component it seems an obvious area to downsize and hence new projects will be squeezed," suggests Charles Stanley analyst James Dawson.The European car market also remains nervous. "Given that the European debt situation remains as problematic as ever and the effect this is having on consumer purchasing power, it is understandable the level of nervousness around the Auto market. To counter this the car manufacturers tend to be offering attractive financing deals to fund new car sales, which we suspect is what is supporting the demand for new vehicle sales. If second hand car sales start to slump, the new car sale prices will mostly likely be viewed as overvalued and hence could follow," Dawson speculates.The same broker has been looking at outsourcing behemoth Serco, where the market consensus is for revenue of £4,622m and profit before tax of £251.7m. Analysts have pencilled in a figure of 38.15p for earnings per share and the full year divi is tipped to rise to 8.18p."The results for 2011 are expected to show revenue and operating profit margin of£4.6bn and 6.1% respectively," Charles Stanley's Tony Shepard notes. "The headwinds for the group have been of the intense pressure on governmentbudgets not only in the UK but also in the US, the latter of which accounts for 20% of Serco?s revenues. In the second half of 2011, American revenues could be lower than the very strong performance in 2010," Shepard suggests.Persimmon continues the rash of updates from the house builders this week. The market is expecting pre-tax profit of £141.1m on the back of sales of £1,530m, while Northland Capital Partners predicts the full year operating margin will clock in at 10%. The broker's own estimates for Persimmon are for sales of £1,603m, and adjusted earnings before interest, tax, depreciation and amortisation of £153m. Northland thinks adjusted earnings per share will be 31.0p (consensus: 34.63p) and the full year divi will be 8.5p (consensus: 9.5p).On the economic front, the Confederation of British Industry (CBI) publishes its distributive trades surveys for February. Barclays Capital expects the headline total sales balance to improve to -10 from January's -22, which makes it a bit more optimistic than the market consensus, which is for a reading of -12. INTERIMSBoomerang Plus, Craneware, Petra Diamonds Ltd., Tracsis, Waterman Group, Wilmington GroupINTERIM DIVIDEND PAYMENT DATECore VCT 'B' Shares, IG Group HoldingsQUARTERLY PAYMENT DATECity of London Inv TrustINTERNATIONAL ECONOMIC ANNOUNCEMENTSBusiness Climate Indicator (EU) (10:00)Consumer Confidence (US) (15:00)Durable Goods Orders (US) (13:30)Economic Sentiment Indicator (EU) (10:00)PMI Retail (EU) (09:00)PMI Retail (GER) (08:55)FINALSAer Lingus Group, AZ Electronic Materials SA (DI), CRH, GKN, Molins, Moneysupermarket.com Group, Perform Group, Persimmon, Promethean World, Provident Financial, Rotork, SDL, Serco GroupAGMSServocaTRADING ANNOUNCEMENTSWhitbreadUK ECONOMIC ANNOUNCEMENTSCBI Distributive Trades Surveys (11:00)jh