The rough beast that is the company results season slouches towards the London Stock Exchange. As its hour approaches, there were a few intriguing signs of what might be to come in the company stories we have analysed this week.
First stop, British Land (BLND). The exchange’s second biggest real estate investment trust by market capitalisation has decided it is undervalued: its shares trade at around 0.7 times its historic book value, versus a wider reit sector trading in line with book, on average.
Hence it is buying back £300m of shares, which is interesting because it suggests a dislocation, in management’s view, between the stock market and the property market. The company sees demand in the latter as strong enough to sell at a good price, and too strong to buy at a good price; bosses don’t see these fundamentals reflected in the share price.
We’ve previously praised British Land and rival Land Securities (LAND) for looking to take some of the risk out of their book, so it would be churlish to expect the company to pile back in at a time of heightened uncertainty around London plc. Is the former’s new strategy a vote of confidence, or a lack of ideas? Click here for our conclusion.
Elsewhere, heads were scratched after window and door specialist Safestyle’s (SFE) profit warning, given it was only a week or so since we had some fairly neutral words in the podcast studio from company management (listen here or in the feed). The wider market has deteriorated further than anticipated. Click here for our take.
That was also interesting given the pre-close trading update from floor coverings specialist Headlam (HEAD), which had like-for-like revenue growth of 3 per cent from residential UK customers in the six months to June. So people are changing the carpet, but leaving the doors? Come to think of it, that’s what I did on my own house: if you haven’t planed, sanded, glossed and re-hung your own doors, you haven’t lived. Look out for Howden Joinery’s (HWDN) interims latter this week, where we will get further information on the repairs, maintenance and improvement market.
Don’t miss our take on the latest big move in the FTSE 100, as Dame Carolyn McCall swaps easyJet (EZJ) for ITV (ITV). Rather than managing the rise in easyJet’s passenger numbers, and the concomitant concerns about sector capacity, Dame Carolyn has to manage the decline in ITV’s advertising revenue.
Having just finished season three of Broadchurch, about 300 years after the rest of the population, your correspondent can attest to the broadcaster’s ability to keep bums on couches. But consider that Netflix has just past 100m global subscribers, and that you can watch old series of many ITV and BBC programmes (though not Broadchurch, currently) on the platform, the content arms race is rather scary for the domestic players. Click here for our thoughts on McCall's call up.
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