Earnings look ahead – Thomas Cook, United Utilities, Imperial Brands

A look ahead at some company news next week.

Thomas Cook
Source: Bloomberg

Thomas Cook (trading statement 26 September)

A recent tie-up with Expedia confirms the remarkable resurrection of Thomas Cook. Expedia will be the preferred provider for many of Thomas Cook’s holidays, giving Thomas Cook access to 60,000 more hotels, thereby boosting its attractiveness to customers. A recent slowdown in its German business is a worrying development, so investors will want to see whether the situation is showing any signs of improvement. Rival TUI’s trading statement this week (28 September) will also be worth watching to see where their areas of weakness and strength are.

A pullback to the 50-day simple moving average (SMA) of 115p looks to be coming to an end, with the share poised to move higher. A return to the 128p level would put the shares above key resistance from September, and also from back in 2015. This looks to be an interesting buying opportunity, with the 50-day SMA a good place for stops. 

United Utilities (trading statement 26 September)

Defensive stocks are still popular despite the slight improvement in benchmark US yields. While the share price has fallen by 9% over the past three months, the healthy dividend of 4.4% and good cover of 1.1 times make it a firm favourite. Questions over potential changes to billing among utilities have receded, so threats to the payout seem to have diminished.

United Utilities has slumped from the £10.60 level all the way to the 2016 and summer 2017 low of £8.53. Below here the next support is £8.16, last reached in mid-2015. A bounce from current levels would head to £8.84, and then on to the 200-day SMA at £9.39.

Imperial Brands (trading statement 28 September)

Imperial remains a favourite among dividend investors, with steady increases in payouts despite the questions hanging over the sector following the US Food and Drug Administration’s (FDAs) decision to lower nicotine levels in cigarettes. A 4.7% yield and healthy cover means the shares look attractive, and this is enhanced by comparison with rival British American Tobacco (BAT), which has a forward price-to-earnings (PE) ratio of 17, versus Imperial’s 12.3.

In late July the shares dropped below the late 2016 low at £33.27. An attempt to move back above this level earlier this month was knocked back, which reinforces the bearish outlook. A bearish cross in the moving average convergence divergence (MACD) adds to the perception that more losses are on the way, with some support at the August low of £31.00 possible.

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