Earnings look ahead – Wolseley, Ladbrokes Coral, TUI

A look at company earnings next week.

Source: Bloomberg

Wolseley (half-year earnings 28 March)

Wolseley enjoyed an excellent year, helped by its strong US operations, which helped to counter poorer performance in the European division. With some of the new administration’s stimulus looking uncertain, we could see some of this premium shaved off. Nonetheless, the first-half update should point towards good growth and an encouraging outlook for the rest of the year, helped by a weaker pound.

Wolseley shares have probably baked in a little too much good news, but the trend is undeniably upwards. A close below £48.43 would signal some weakness ahead, and this will be magnified if we lose the post-Brexit rising trendline. Areas of support in any bigger sell-off could be £46 and then £44, while the rally will need to post a daily close above the recent high near £52 to indicate that more gains are on the way.

Ladbrokes Coral (full-year earnings 28 March)

Maiden results from Ladbrokes Coral will focus on how the integration of these two firms is progressing, and on the potential cost savings to be made. Recent trading updates pointed to a healthy end to the year, with Cheltenham having proved friendly to the bookies and getting 2017 off on the right foot. Discussion should also focus on potential restrictions to the fixed-odds betting terminals, which form a significant part of its retail venues.

Ladbrokes Coral shares have been on a rising trend since late 2015, but since the summer 2016 peak at 165p have been under pressure. The spike from the rising trendline appears to have come unstuck, so we could see a return to 130p and then 120p. The next upside levels to watch are 143p and then 150p.

TUI (trading statement 29 March)

A second-quarter update from TUI provides some opportunity to see how bookings over the Christmas period are progressing. Its most recent update nudged the profit forecast higher, and investors will want to see whether increased bookings for long-haul destinations are helping to make up for potential weakness closer to home. Dividends remain healthy, and further integration of its existing brands and improvement in margins for online booking should also be of note

We saw the price fall below the rising trendline that has held since June, but the inside trendline off the 2015 high has come into play, preventing further downside. Any bounce could push on to £11.66 or even £12.30. A drop below £10.92 would indicate a drop to the 200-day simple moving average at £10.63, or even further, towards £10.

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