This week I ask whether M&S can recapture past glories. I also discuss Purplebricks’ business model, assess Persimmon’s prospects now that Help to Buy has been extended, and evaluate ITV, Morrisons and Wetherspoon.
The business performance of WM Morrison (MRW) has been on the up for the past few years and the company remains on track to meet analysts’ forecasts for the full year. Food retail is a fiercely competitive market, however, and although Morrisons is one of the better operators out there, the outlook for growth is limited.
JD Wetherspoon (JDW) has many detractors but it has been the best in the pubs sector at growing like-for-like sales in recent years. The key problems faced by all pubs is being able to grow their revenues enough to offset rising costs – particularly wages and business rates.
Shares in online estate agency Purplebricks (Aim:PURP) have had a torrid 2018 and are down over 56 per cent so far this year. I still have doubts about its business model and whether it can ever make the kind of profits needed to justify its current stock market valuation.
ITV (ITV) has long been seen as a takeover candidate, yet the company has not received a bid approach in years and in my opinion, may not do so for a while.
In my view, Marks & Spencer (MKS) is still too reliant on the custom of wealthy older people and will face terminal decline unless it can change its ways. Half-year results released this week show that the company still has much to do.
Builder Persimmon (PSN) has become extremely profitable on the back of Help to Buy and is expected to have operating margins of nearly 30 per cent in 2018, the highest in the sector. Last week’s budget extended HTB out to 2023 – from 2021 – and whilst it is going to be limited to first time buyers, this is good news for Persimmon and its peers.
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