Could Brexit uncertainty be suppressing growth forecasts? There is certainly a suspicion this is the case for smaller companies, which often (but not always) tend to have more UK-focussed business models. Only one company included in the FTSE All Small Companies index passes more than 6/8 tests.
- The only FTSE All Share company that passes all our Great Expectations momentum tests is AVEVA (AVV) which is a holding company for providers of engineering, design and information management software.
- Five companies pass 7/8 tests, three of which fail the test that forecast full year earnings growth must be above 10 per cent. These are public services company Serco (SRP), oil giant BP (BP.) and private equity investment trust HgCapital (HGT). The other two companies – digital services firm Kainos (KNOS) and food concessions operator SSP Group (SSPG) - fail the test that next full year earnings must grow by more than 10 per cent.
- Kainos is the only main market company to pass more than 6/8 small cap tests (7) but on Aim, 14 companies achieve this score or more. Vehicle testing solutions firm AB Dynamics (ABDP) and cloud services provider Gamma Communications (GAMA) had full marks, although this is also a signal to investigate further – especially at this stage of the economic cycle.
