Companies Reporting: Direct Line, Next, Wetherspoon

Our regular look at the FTSE 350 and a selection of other companies reporting from 18 – 22 March.

• Can takeover talk continue to support Direct Line’s valuation?
• Will full-price sales hold up at Next?
• Margins under the microscope for JD Wetherspoon 

Direct Line Group, Full Year Results, Thursday 21 March

Matt Britzman, equity analyst, Hargreaves Lansdown: Direct Line LON:DLG has been struggling to find its footing in recent years. A potential takeover by Ageas has been a catalyst for rerating in the past month. But there’s still plenty hanging in the balance. The Board has rejected two proposals so far – both for a part cash, part stock deal. Investors will be keen to hear thoughts from management and details on ‘further initiatives’ supposedly coming next week.

Back to the day-to-day. Expect motor insurance price hikes to dominate headlines and commentary from the new CEO should point to improving insurance margins over the year. But Direct Line was slower to raise prices than the wider market which means it’ll take longer to feel the benefits than peers. There’s still a long way to go if Direct Line wants to return a stable dividend and restore investor confidence. In the meantime, the valuation is being supported by deal speculation, always a risky spot to be in.

Next, Full Year Results, Thursday 21 March

Guy Lawson-Johns, equity analyst, Hargreaves Lansdown: Next LON:NXT gave investors plenty to be happy about in their last update, with growth of 9.1% in its Online channel helping sales to exceed group forecasts. While it may be winning the online race, the retail sector remains a tough place to operate. And with a history of under-promising and over-delivering, markets have come to have high expectations.

In next week’s results, Next is looking to achieve £4.78bn in full-price sales, up 4.0% on last year. Improved full-price sales means profits will be focus too. Next increased its full-year pre-tax profit guidance by £20m to £905m, which looks achievable.

• Companies Reporting: easyJet, Burberry, Netflix
• Three Quick Facts: Next, Mirriad, Serica Energy
• Companies Reporting: Next, Greggs, Marks and Spencer

JD Wetherspoon, Half Year Results, Friday 22 March

Derren Nathan, head of equity research, Hargreaves Lansdown: JD Wetherspoon LON:JDW has already flagged that sales were robust in the first half of its financial year, up 10.1% on a like-for-like basis. In next week’s half-year results, the group, chaired by Tim Martin, will reveal whether it’s managed to squeeze higher margins out of the increased pub takings. Whilst Wetherspoon has noted falling inflation, labour and energy costs have been called out as areas of concern.

The Chancellor’s budget was a mixed bag for the sector, so Wetherspoon will have to continue to rely largely upon operational efficiency to keep delivering the value offer that’s helped it grow its market share. The market will also be looking to see if the encouraging sales momentum seen late in the first half has continued in current trading.

This article has been brought to you in association with Hargreaves Lansdown. All opinions expressed in this article are from the analysts and do not necessarily represent the opinions of The Armchair Trader.

FTSE 100, FTSE 250 and selected other companies scheduled to report