Third quarter results from leisure group Whitbread (LON:WTB) are expected to be strong, especially as comparative figures from a year ago are not too demanding.
City broker Cazenove expects the group’s Premier Inn chain will post like-for-like growth of 2% while the restaurants business, which includes brands such as Beefeater and Brewers Fayre, is tipped to deliver 1% LFL sales growth.
Once again, however, it is the Costa Coffee business which is likely to steal the show, with Cazenove going for LFL growth of 7%.
The broker thinks Costa will have benefitted from cold and wet weather conditions in the UK over the reporting period.
As for hotels chain Premier Inn, the key metric here is revenue per available room, or revPAR as it is called in the trade. Cazenove thinks revPAR growth in the regions will have been stronger than in London during September and October.
Tuesday also sees the latest instalment in the seemingly unstoppable rise of ASOS’s (LON:ASC), the online retailer.
The share price has virtually doubled in the last year and the online retailer’s market capitalisation is more than double that of any stock in the AIM 50 index.
While retailing kingpin Tesco (LON:TSCO) is showing every sign of throwing in the towel in its battle to conquer the US, ASOS is winning over the Americans, with sales in the USA up 72% year-on-year in the five months to August 31.
The group will give a trading statement on Tuesday covering the three month period ended 30 November, and Peel Hunt’s John Stevenson thinks the firm will report US sales growth of around 65%.
The overseas growth rates make progress in ASOS’s home market, the UK, seem sedate by comparison, but the 13% growth it achieved in Blighty in the five months to end-August would be the envy of most retailers. Peel Hunt predicts first quarter UK sales growth will be around 17%.
“UK and US sales growth will be taken well by the market, with a strong UK performance typically a good catalyst for the share price. However, with ROW [Rest of World] (+45% forecast) and EU (+15% forecast) growth rates moderating and likely to be behind consensus expectations, we expect profit before tax forecasts to remain unchanged again,” Stevenson said.
HSBC, which has a neutral rating on the stock and a 12-month price target of 2,590p, notes that ASOS derives around 42% of its revenues from the UK and its entire turnover from clothing, footwear and fashion accessories.
“With top-line growth dynamics driven entirely the structurally higher online channel to market and investment, ASOS has little to gain from an improving UK macro outlook in our view. Furthermore, with a targeted EBIT [earnings before interest and tax] margin of 8% for the next three years, we are not expecting any operational leverage in the short-term,” HSBC said.
Plant Hire firm Ashtead Group (LON:AHT) is a keeper, according to Investec, which thinks Tuesday’s interims will drive consensus earnings upgrades.
“An early Christmas present could be delivered with the interims and this may well drive the price over 400p. However, in our view, this stock is becoming more than just a short term play around numbers. The group should continue to take market share, structural growth is set to increase and with a US recovery to look out for, AHT could be one to take a longer term view on,” suggests Investec analyst Andrew Gibb.
Switching to the economy, the Royal Institution of Chartered Surveyors’ housing price balance for November is expected to remain unchanged from October’s level of -7%.
The house price balance figure is calculated as the proportion of surveyors out of every 100 polled reporting a rise in housing prices minus the proportion reporting a fall in prices.
Announcements expected
Companies: Ashtead Group, ASOS, BAA, Carpetright, Domino Printing Sciences, Go-Ahead Group, IG Group, Whitbread
Macro: RICS house price balance (UK), ZEW Surveys (GER & EU), US trade