What To Expect From Lloyds Banking Group plc, Persimmon plc And Merlin Entertainments plc Results This Week

Dave Sullivan looks at expectations for Lloyds Banking Group plc (LON: LLOY), Persimmon plc (LON: PSN) and Merlin Entertainments plc (LON: MERL) that report this week. Are there bargains to be had?

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Yesterday saw the FTSE 100 ease past the 6,000-point resistance that has dogged any signs of a recovery for some time now. However, as we head into another busy week of companies reporting their results to the market, it’s anyone’s guess where the blue-chip index will end up at close of play on Friday afternoon.

As you will read in more detail below, I’ve handpicked three companies due to release results this week. I’ve selected an outperformer, an index-hugger and a laggard. Will their fortunes change for the better or worse following their results? Let’s take a closer look…

Shares on sale?

A quick glance at the chart shows that investors in Lloyds Banking Group (LSE: LLOY) have needed nerves of steel as the market fretted about another looming financial crisis. The shares have recovered a fair amount of ground from recent lows, however they’re still currently trading nearly 30% below recent highs. Has the market become too negative on the shares?

For the year ending in December 2015 analysts’ consensus EPS is 8.26p – that puts the shares on a 2015 PE ratio of less than eight! That looks rather cheap to my mind. However, one should remember that the market can always take a turn for the worse in these unpredictable times.

Priced for perfection?

Cheap is not a word I would use to describe the next company under review today. Merlin (LSE: MERL) the UK-headquartered entertainments company, reports its full year numbers on Thursday.

Analyst expectations have been adjusted down to EPS of 17.5p per share for the year ended 2015 following a profit warning in September and management providing a further ‘in-line’ trading statement in December.

However, even though there have been no more profit warnings, the shares currently change hands on a rather punchy 25 times 2015 earnings and around 22 times forecast earnings for 2016. To my mind that doesn’t leave too much room for error, even though the company is seen as a quality operator.

Safe as houses?

Last up is blue-chip housebuilder Persimmon (LSE: PSN). Named after the 1896 Derby-winning horse, this housebuilder has grown organically and by acquisition since being founded by Duncan Davidson in 1972.

And grow it has, currently with a market capitalisation of around £6bn, this is the UK’s largest housebuilder by market cap.

As can be seen from the chart above, the shares have been volatile of late along with a number of other housebuilders as investors have begun to worry about whether the market has topped out and the only way is down from here. However, in my view, there’s still lots to like about the sector given the need for more houses to be built, a supportive framework for first-time buyers and low interest rates.

Indeed, all of the housebuilders that I follow are indicating that current trading is going well, giving good visibility for the future and allowing the board to continue to increase dividends to shareholders.

And in Persimmon’s case, analysts have been upgrading their earnings forecasts since July, leaving the shares trading on a 2015 PE of around 12 times earnings with a further return of capital expected to total around £1 per share. That’s good for a yield of over 5% at current prices, according to data from Stockopedia.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Dave Sullivan owns shares in Persimmon. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »

Investing Articles

Are HSBC shares a FTSE bargain? Here’s what the charts say!

There are plenty of dirt-cheap FTSE 100 banking stocks for investors to choose from today. Our writer Royston Wild believes…

Read more »

Three signposts pointing in different directions, with 'Buy' 'Sell' and 'Hold' on
Investing Articles

Just released: Share Advisor’s latest ‘Hold’ recommendation [PREMIUM PICKS]

In our Share Advisor newsletter service, we provide buy, sell, and hold guidance for our universe of recommendations.

Read more »

Investing Articles

Investing £5 a day could help me build a second income of £329 a month!

This Fool explains how £5 a day, or one less takeaway coffee, could help her build a monthly second income…

Read more »