Companies Reporting: McDonalds, Aston Martin, GSK, Next

Our regular look at the FTSE 350 and other companies reporting from 28 Oct – 01 Nov.

• Recent public health scare unlikely to dent McDonalds’ trading
• Aston Martin Lagonda’s looking for a jump start from Chinese stimulus
• GSK’s focus shifts from courtroom to clinic
• Recent retail data should be positive for Next

McDonalds – Q3 Results, Tuesday 29 October

Susannah Streeter, head of money and markets, Hargreaves Lansdown: McDonalds’ NYSE:MCD shares were shaken by news of the e-coli outbreak in ten states in the US, linked to its burgers, and investors will want to see to what extent this has dented the fast-food giant’s outlook. It’s too early to assess the size of any liability but so far analysts don’t seem to be expecting this to weigh too heavily on the valuation. However, a public health scare is the last thing McDonalds needs given that it’s already been struggling to drive growth. Early indications pointed to trading staying challenging in the third quarter as its customers demanded better value after absorbing years of price rises.

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Value offers may be being promoted to help propel more customers through the doors, but that won’t help if the company doesn’t act quickly to allay customer fears about burger safety. More broadly, McDonalds’ expansion plans will be in focus. It’s hoped that opening new restaurants will lure in new customers rather than relying on people to spend more per visit.

On a like-for-like basis, sales were down 1% in the second quarter, showing just how tough it has been to persuade customers to spend more at their local fast-food joints. It’s investing in putting more value offerings in the mix, but despite its huge scale, it’s still facing some challenging trading conditions. The company has already flagged that it expected new openings to make a 2% contribution to restaurant takings in the UK and Ireland by the end of the year and investors will want to see if that will still be on track.

Aston Martin Lagonda – Q3 Results, Wednesday 30 October

Aarin Chiekrie, equity analyst, Hargreaves Lansdown: Aston Martin LON:AML has been struggling to crank up its engine, and at the end of September, the group issued a profit warning. Supply chain disruptions have put a spanner in the works of its delivery guidance, and sales in China have been poor as the region continues to wrestle with its own economic woes. All of this means underlying cash profits (EBITDA) look set to shift into reverse and come in below last year’s level.

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When Aston Martin reports results next week, it will be interesting to see if China’s recent blitz of stimulus measures has shifted its outlook for the region. High debt levels are also a real issue for the group, investors will be keen to hear what management has in mind to tackle the rising problem before it gets too out of hand.

GSK – Q3 Results, Wednesday 30 October

Derren Nathan, head of equity research, Hargreaves Lansdown: GSK’s LON:GSK settlement of the majority of cases related to alleged cancer links with its heartburn drug Zantac, has shifted the focus back to next week’s third-quarter trading update.

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The company’s already upgraded guidance twice this year despite headwinds for two key products, Arexvy and Shingrix, in the important US market. How that situation has unfolded since will play a key part in determining which way guidance moves next.

With a new approval in place for Arexvy in Europe, it will be useful to see how early patient uptake has been, as well as the commercial impact of clinical trial readouts and approvals for other products seen since the second quarter results. It will also be interesting to find out how momentum is building for HIV and cancer treatments launched earlier this year.

Next – Q3 Trading Statement, Wednesday 30 October

Aarin Chiekrie: Next LON:NXT has had a great start to the year, and that’s been reflected by around a 25% uplift in its market value year-to-date. Consumers appear to be holding up well too, helping retail sales beat forecasts for the third month in a row. Given its desirable clothing proposition and recent track record, it wouldn’t be a surprise to see Next capture its fair share of this spending. That could fuel yet another upgrade to full-year profit expectations in next week’s trading announcement.

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Looking further ahead, its online channel is likely to be the main growth driver, despite already accounting for more than half of group sales. Overseas expansion is still in its early stages too. With European shoppers just a stone’s throw away, there’s a big opportunity here if Next can execute its expansion plans well.

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