Companies Reporting: LVMH, PepsiCo, easyJet

Our regular look at the FTSE 350 and a selection of other companies reporting from 9 – 13 October.

• LVMH faces challenges as Chinese consumption is called into question
• PepsiCo set to feed consumers with higher prices
• Has summer disruption clipped easyJet’s wings?
• Hays suffers from continued uncertainty

LVMH, Q3 Trading Statement, Tuesday 10 October

Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown: “French luxury conglomerate, LVMH [EURONEXT:MC], owns some of the most potent brands on the planet. To that end, analysts expect to see continued positive momentum in next week’s update. With that said, there are some challenges.

Investors would like to know how trading in the US is faring, as there have been rumblings of a slowdown. There are expectations of a continued normalisation of spending in Europe, which could dent progress. Crucially, there will be an update on how China is shaping up. This is a very important region for LVMH, both within China’s borders, and spending abroad. Economic indicators are creaking in the region and, although luxury spending tends to be more robust than average consumption, investors are keen to hear if the uncertain environment has shaken LVMH’s expectations for the highly important festive trading season.

LVMH’s valuation has had a sharp upwards march in the last year. That means there’s pressure to perform, and the market’s likely to react harshly if growth faces a blip.”

PepsiCo, Q3 Earnings, Tuesday 10 October

Aarin Chiekrie, equity analyst, Hargreaves Lansdown: “Next week’s third-quarter results will show how well PepsiCo’s NASDAQ:PEP handling the pressure of rising input costs. Last quarter, revenue grew 13.0% organically to $22.3bn, with sales rising across all regions driven by higher prices. And despite inflationary headwinds pushing up costs, improved sales and other cost management measures have helped keep underlying operating profit growing at a faster pace.

Full-year organic revenue growth guidance has been upgraded for the second time this year, now expected to rise at 10% compared to the previous 8% target. This signals that management’s confident it can keep feeding through price hikes to customers, while seeing little drop-off in volumes – credit to Pepsi’s laser-like focus on brand quality in recent years. But curious eyes are focused on just how quickly these price hikes will get phased onto customers. Raising prices too sharply risks alienating loyal customers, pushing them down the value chain towards cheaper alternatives.”

easyJet, Full Year Trading Statement, Thursday 12 October

Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown: “easyJet LON:EZJ expects its final quarter to show another record pre-tax profit performance, including a 10% increase in revenue per seat. This follows a strong third quarter where continued pent up travel demand help profits soar.

While trends are encouraging, investors can’t rule out disruption from air traffic control constraints due to strike action. The extent of the damage to the bottom line here will be important to understand but shouldn’t be seen as a long-term indicator of the group’s health.

More important will be how booking momentum’s looking as we head into the new financial year. With cost-of-living pressures still very much alive and kicking, analysts will wonder how much longer the travel sector’s resilience has left to run.”

Hays, Q1 Trading Statement, Thursday 12 October

Sophie Lund-Yates, lead equity analyst, Hargreaves Lansdown: “As a recruitment giant, Hays LON:HAS is vulnerable to any economic fallout. In the face of a slowing economy, investors expected to hear that revenues have taken a hit. While the UK’s economy isn’t faring as badly as thought, growth isn’t shooting the lights out and companies are still proceeding with caution, which doesn’t usually mean overactive hiring.

At the same time, the market’s been kept up to date on Hays’ progress, and there shouldn’t be too many surprises. There will be particular interest in news of expected trends as we head into the winter months.

The shares have been badly punished since the pandemic and are suffering from ongoing uncertainty. At the same time, the group’s long-term potential and balance sheet strength aren’t necessarily being reflected in the market’s current assessment.”

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