There isn’t too much news from FTSE 100 companies coming our way in April. But two key events from a couple I’m watching could make it a good month to consider them.
Retail rebound?
On Wednesday 9 April, JD Sports Fashion (LSE: JD.) is due to bring us a fourth-quarter update for the year to February 2025. The share price has taken a bit of a bashing in the past few years. And it’s down 47% in just the past 12 months.
The company’s US expansion looks like it maybe couldn’t have come at a worse time. And investing in a downtrodden stock can be a risky business. Especially if it’s in as competitive a market as discretionary clothing retail.
Valuation plunge
Forecasts suggest a big fall in earnings per share (EPS) for the year, down around 25%. But analysts already expect to see a 50% rebound in 2026, followed by another 13% the year after. If that comes off, it could drop the JD Sports price-to-earnings (P/E) as low as 5.5 by 2027.
At this stage, much of these predictions have to be speculative. A lot can happen to a sector like this in two years, especially with President Trump’s enthusiasm for tariffs and trade war.
In announcing its Q4 update, JD Sports told us it will include “initial guidance for FY26 and an update on our medium-term plan“. That’s what I most want to see.
Building back?
Wednesday 16 April brings a third-quarter trading update from Barratt Redrow (LSE: BTRW), in its first full year since the merger of Barratt Developments and Redrow completed in August 2024.
The share price is down 10% in the past 12 months. But at least we’re looking at only a 6% decline over five years. That’s perhaps not too bad for a sector under so much pressure.
Looking forward, February’s first-half report told us: “Whilst our full year out-turn remains dependent on how the market evolves through the Spring selling season, based on solid reservation activity since the start of January, we expect to deliver total home completions of between 16,800 and 17,200 in FY25 (including c. 600 JV completions).”
Guidance needed
I’d really like to see some update on how that spring selling season is shaping up. And if the company sees the year turning out the way the City analysts do, we could be on for something good.
Forecasts suggest a return to EPS growth this year, almost doubling from 2024’s depressed level. After that, they have another near-doubling on the cards between 2025 and 2027. That would still leave us short of Barratt’s 2023 earnings. But a long-term recovery has to start somewhere.
These forecasts put the P/E down at less than 10 by 2027. We can’t ignore the pressure the house builders will still face while the economy is weak and mortgage rates are high. But I think this has to be a good time to consider Barratt Redrow.
