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Earnings look ahead – Taylor Wimpey, Just Eat, Next

A look at company earnings next week. 

Source: Bloomberg

Taylor Wimpey (first-half earnings 31 July)

The UK housing market continues to slow, but it does still show signs of healthy growth. Up to the end of April Taylor Wimpey still saw good demand for new housing, and even if the Bank of England (BoE) hikes next week, rates remain near record lows. At just 8.1 times forward earnings, the shares continue to trade on an undemanding multiple.

Taylor Wimpey continues to find support around 170p, as it did in March and April. Further gains above 179p would see the 185p level and then 189p challenged. A close below the 170p support zone brings the 160p low from June last year back into view.

Just Eat (first-half earnings 31 July)

A forward price to earnings (PE) ratio of 40 means that Just Eat has to keep growing at a rapid rate, but so far it has managed to avoid any crashing disappointments. Deliveroo’s expansion plans signal that competition will ramp up, but there is still plenty of growth to go around. Further expansion should help drive revenues, even with the increased investment this requires.

Having recovered from two big dips so far this year, the shares remain in a strong uptrend and are poised to challenge the £9.06 area. Above this, the shares are in all-time high territory again. Declines could find support around £7.35 and £6.60.

Next (Q2 trading statement 1 August)

Next’s management will be looking to maintain the momentum seen in the first quarter (Q1), when it beat estimates and reported the successful resolution of the errors that had dogged its 2017 performance. Warm weather should help performance too. At present it trades at 13.7 times forward earnings, above its longer-term average, but still not excessive when compared to the lofty valuations of 2014 and 2015. While no longer in the bargain-bucket end of valuations, it still has room to grow.

Next shares have recently recovered the £60 level, as the rebound continues. Dips to the £57 area have found buyers, and renewed move higher will target £62. Below £56, the price will head to support at around £53.

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