The week ahead: Can Halfords arrest the slump?

Bicycle retailer Halfords will kick the coming week into action, while a trio of housebuilders including Bovis and Berkeley also update the market.

Monday 4 September

Trading Statements

Tax Systems, Highland Gold Mining, Curtis Banks, Amryt Pharma, Johnson Service Group, Dechra Pharmaceuticals, Tern

AGM/EGM

Redcentric

Tuesday 5 September

Since Jill McDonald announced her intention to stand down as boss of Halfords to take a key role at Marks & Spencer, shares in the bike-to-car-parts retailer have skidded 16% lower. Currently trading at 315p, at prices not seen since the aftermath of the Brexit vote, at least part of its woes have been sector related.

Constituents in the general retail sector were the biggest profit warners in the second quarter of 2017 with seven in total, according to consultant EY's latest report.

That said, the lack of an announcement on McDonald's successor "has overshadowed sentiment towards the shares" as well, according to Investec's retail analyst Kate Calvert. "There is some concern that a new CEO may reset margins/announce another major capex programme," she explains. However, the broker views this as an unlikely scenario.

Calvert expects Tuesday's update for the 20 weeks to 18 August to confirm solid trading, with first-quarter like-for-like sales up 3%. There should also be a positive benefit from Easter and an increase in staycations due to sterling weakness, we're told.

Autocentre like-for-like is expected to be 2% down due to the company's decision to stop participating in a tyre affiliate programme as the net profit was insufficient. However, "gross margin should improve overall with management expecting a net profit benefit".

On a forward price/earnings (PE) ratio of 10 times, Calvert sees Halfords' valuation as "undemanding" given its strong cash generation and potential for double-digit total shareholder return per annum.

Trading Statements

Alpha Fx, IQE, Vipera, Cairn Homes, Dalata Hotel Group, Mattioli Woods, A&J Mucklow, Alumasc, Stadium Group, EU Supply, Halfords

AGM/EGM

888 Holdings

Wednesday 6 September

Trading Statements

WANdisco, PPHE Hotel Group, Vectura Group, Harworth Group, Gama Aviation, Faron Pharmaceuticals, Diurnal, Berkeley Group, Xaar, LoopUp

AGM/EGM

Inspirit Energy, Oneview Group, Severfield, Sports Direct International, Trakm8 Holdings, Funding Circle SME Income Fund, The Fulham Shore, Hornby

Thursday 7 September

McBride, the household and personal care product manufacturer, will report full-year numbers Thursday. In the middle of July, it indicated trading in the second half of 2017 had been in line with expectations, despite encountering cost headwinds.

Geographically, the UK and Southern Europe are currently showing better momentum, with Northern Europe stable. However, Eastern Europe remains challenging.

Investec's Nicola Mallard forecasts pre-tax profit of £34.5 million and earnings per share (EPS) of 13p. At a current 176.5p, that puts the stock on a PE of 13.6 times for 2017.

"Looking into FY18, the group is now seeing more contract wins than losses, but the timing of this new business commencing might mean top-line progress is only apparent in the second half of 2018," adds Mallard.

Trading statements

Brady, International Public Partnership, ProPhotonix, Molins, Redde, Frontier Developments, McBride, Bovis Homes, CentralNic, Hunters Property

AGM/EGM

Sophos Group, Nakama Group, Alpha Real Trust, Imaginatik

Friday 8 September

AGM/EGM

Masawra, Schroder Real Estate IT, SimiGon

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.