Edison Investment Research

Smart Home - Man and dog

Apple is losing badly despite offering the best user experience.

Market Commentary - Housing, Infrastructure, Construction and Services 7th March 2017

Grafton and Ibstock delivered full year numbers for 2016 today and Ashtead its Q3 and YTD progress.  Ashtead shows us progress with Q3 and YTD rises in revenue of 13% and operating profit of 9%; the UK operations showed positive growth in revenue at 14% which is a positive read across to Speedy and others though EBITDA margins are down a tad at 36.6% from 37.5%.  Lakehouse has decided that enough is enough on the main market and it is flipping to AiM. And McCarthy and Stone has issued an update in which it tells us that trading has remained stable having previously indicated that order books in its segment of the market were a constraint on growth. Its guidance is that full year expectations are unchanged.

Digital assistants – Man and dog

Google Assistant and Baidu Duer are miles ahead of everything else that is being offered including Alexa, Siri and Cortana… Google has a vastly superior product but Alexa is much better at controlling the smart home, albeit with an awful user experience.

Market Commentary - Housing, Infrastructure, Construction and Services 6th March 2017

Unusually there is no directly relevant news for the sector this morning. The Budget later this week will no doubt create some speculation about the impact of its measures on the sector. The main story on Friday was Berendsen, down 11.4% to 823p by close of play, having been down some 17% at one stage. The profit warning for 2017 was unexpected and what it termed “legacy” issues were blamed; the meaning of legacy in the sector is bad stuff emerging now that has nothing to do with current management.

Earnings trends: Gap risk endures in US

As US markets rise, US earnings forecasts fall

Equity investors have clearly taken some comfort from Trump’s recent address to the US Congress. While the speech was delivered with some unanticipated polish, there was in our view little new policy detail and we were surprised by the resulting surge in global equity markets. In our view, investors and the corporate sector will struggle to incorporate Trump’s fiscal initiatives into capital spending plans and profits expectations until more detail becomes available Therefore, in an enviroment where US earnings forecasts are declining, we continue to question the sustainability of the bull market in US equities.

Market Commentary - Housing, Infrastructure, Construction and Services 3rd March 2017

Berendsen has produced solid numbers this morning, in line with the reduced expectations set in the late summer. The news this morning will not put the stock back at its previous valuation, in our view. Carillion bounced a little yesterday and was the best performer, up 3.3% to 213p.

Market Commentary - Housing, Infrastructure, Construction and Services 2nd March 2017

Capita and Travis Perkins have reported their 2016 results this morning. Capita is to part company with CEO Andy Parker, which is no real surprise and he will leave when a successor is found, probably towards the year end. Travis Perkins has delivered results roughly in line with the expectations for 2016 which were reduced during the year as it became clearer that trading conditions were tougher than expected, especially in many plumbing and heating lines.

Misunderestimations - how accurate are production forecasts from industry and analysts?

Looking at the accuracy of production forecasts for major oil companies (by the companies and by covering equity analysts)

We examine how accurate industry participants are in forecasting production in advance, and see how these seem to be consistently over optimistic

What a difference a year makes

BP upgrades FCF guidance

BP’s 2017 strategy presentation served to highlight what difference one year can make in the world of integrated oil and gas. Upstream FCF guidance provided in Baku (2016) of $7-8bn in 2020 has been increased to $13-14bn in 2021. Combined group, upstream plus downstream, FCF guidance for 2021 now totals $22-24bn pre-tax. This is a material step up in post capex cash generation with the excess available to address scrip dilution, distribute to shareholders, reduce gearing, or pursue growth - assuming guidance is achievable of course. An upstream FCF bridge is provided below showing that a significant proportion of the increase comes from a 5$/bbl increase in oil price planning assumption from 50$/bbl real to 55$/bbl real as well as recent acquisitions, most importantly the ADCO onshore concession. 

MWC Day 1 – The time machine

The taxonomy of MWC is changing. Nokia has through nostalgia created some excitement in the mobile phone industry but elsewhere the signs of maturity are everywhere.