Earnings results are a great way for investors to judge a company. They’re used to determine whether companies are on track with their initial guidance. These results can often radically move share prices in either direction, depending on the numbers reported. So, here’s an earnings preview for three FTSE firms reporting results this week.
It’s always best to compare firms’ new quarterly/half-year numbers to those from prior years. But certain revenue figures may have been impacted by the pandemic, so it’s important to get context from pre-pandemic levels too. It can also be useful to consider whether a company can perform better than its previous year’s numbers, or if it can beat analysts’ annual forecasts. Analysts in the UK don’t always publish earnings previews for quarterly or half-year periods, but given their popularity, the shares covered below are exceptions.
Lloyds (H1 Earnings)
Lloyds (LSE: LLOY) is one of Britain’s biggest financial institutions. Its brands include Lloyds itself, Halifax, and Bank of Scotland. It earns the bulk of its revenue from mortgage loans. The FTSE 100 bank is expected to post its half-year earnings for its six months performance ending June on 27 July. The company’s financial year ends in December.
The overall consensus is that Lloyds is expected to continue growing its top line from rising interest rates. That being said, its diluted EPS is expected to decrease for the half year and full year. This is most probably due to the increasing number of defaults and bad loan provisions. Investors will also be keeping an eye out for the remediation figure, number of late-stage loans, and free cash flow to determine whether the UK is entering a recession.
| Metrics | Amount (H1 2021) | Analysts Earnings Estimates (H1 2022) | Amount (FY21) | Analysts Earnings Estimates (FY22) |
|---|---|---|---|---|
| Net Income | £7.6bn | £8.2bn | £15.8bn | £16.8bn |
| Diluted Earnings per Share (EPS) | 5.0p | 3.0p | 7.5p | 6.0p |
Shell (Q2 Trading Update)
Shell (LSE: SHEL) is a British multinational oil and gas company. It is one of the biggest oil and gas firms. And by revenue and profits, it’s one of the largest companies in the world. The giant is set to reveal its Q2 numbers for its three months performance ending June on 28 July. The company’s financial year ends in December.
The earnings preview seems to indicate a top and bottom line improvement to Shell’s business, as last year’s figures were still impacted by worldwide lockdowns. As global travel resumes, investors will be keeping an eye out for future guidance to determine whether analysts estimates can be met for the full year. If so, the Shell share price is expected to stay green for the foreseeable future.
| Metrics | Amount (Q2 2021) | Analysts Earnings Estimates (Q2 2022) | Amount (FY21) | Analysts Earnings Estimates (FY22) |
|---|---|---|---|---|
| Revenue | $60.5bn | $100.9bn | $261.5bn | $408.5bn |
| Adjusted Earnings per Share (EPS) | $0.71 | $1.38 | $2.49 | $5.22 |
Unilever (H1 Earnings)
Unilever (LSE: ULVR) is a consumer goods conglomerate producing food, condiments, ice cream, cleaning agents, beauty products, and personal care. Its brands include Lynx, Ben & Jerry’s, Dove, and many more. Unilever will be releasing its half-year earnings for its six months performance ending June on 26 July. The company’s financial year ends in December.
While revenue is expected to increase on a half-year and full-year basis, underlying EPS is expected to fall. This is most probably due to high inflation rates that are beginning to take a toll on a global scale, with higher costs impacting the producer’s operation expenditure. Nonetheless, a beat on both revenue and EPS estimates this week could see the Unilever share price push into the green for the year.
| Metrics | Amount (H1 2021) | Analysts Earnings Estimates (H1 2022) | Amount (FY21) | Analysts Earnings Estimates (FY22) |
|---|---|---|---|---|
| Revenue | €25.8bn | €29.0bn | €52.4bn | €58.0bn |
| Underlying Earnings per Share (EPS) | €1.33 | €1.27 | €2.62 | €2.49 |
