The week ahead: Babcock, Finsbury Food

Baker Finsbury Food kicks the week off, while Babcock and small-cap winners Keyword Studios, MaxCyte and Attraqt also report.

Monday 18 September

The week kicks off with full-year results from baker Finsbury Food. It's already said it expects to deliver profits in line with market expectations on revenues of around £314 million.

While revenues are growing, it's only modest at 3% on a like-for-like basis and below Investec Securities' forecast. Therefore, the broker has reduced its expectations for full-year 2017 pre-tax profit by 4% to £17.2 million.

That puts Investec more in line with consensus, but it's why the target price is reduced by 14% to 140p. Still, that implies upside of around 40% from Friday's price of £1. Finsbury trades on a discount versus other own label operators, explains analyst Nicola Mallard.

Looking further down the road, Mallard says she is keeping a "prudent view on profit growth for 2018" as cost pressures remain abundant, including a spike in the price of butter to levels not seen before.

It's something that's concerning many, including the company itself. However, it reckons it is well equipped to maintain its market position and continue to deliver growth and improved shareholder value over the period ahead.

Three weeks ago, the company announced it had closed its loss-making Grain D'Or business, which provided premium baked goods for the UK pastry sector.

Trading Statements

Ergomed, M.P. Evans, Medica, Secure Income Reit, Concurrent Technologies, Green Reit, Bluefield Solar Income Fund, Finsbury Food, City of London Investment Group, DP Poland, Learning Technologies

AGM/EGM

Mercia Technologies

Tuesday 19 September

Trading Statements

Yu Group, MaxCyte, Keywords Studios, Gulf Marine Services, Flowgroup, Judges Scientific, PureCircle, Eagle Eye Solutions, Advanced Medical Solutions, Sinclair Pharma, Swallowfield, Anpario

AGM/EGM

HML Holdings, Safeland

Wednesday 20 September

The big one this week could be a trading update from £4 billion support services behemoth Babcock. It's been a tough few weeks for the sector, with a number of high-profile profit warnings including most recently from Interserve.

Babcock has been on a poor streak of late and lost nearly 6% in August, something that baffles one of its key shareholders, star fund manager Neil Woodford. Over longer timeframes, it's lost almost a fifth of its value in four months and is now 28% lower than the 14-month high at 1,112p achieved in September 2016.

Its AGM update in July guided to trading being in line with market expectations after a good start to the financial year. Broker Liberum continues to expect group sales growth of over 5% annually through to 2020, which would put sales for 2018 at £4.79 billion.

Pre-tax profit is forecast to be £505 million, up from £481 million in 2016, while net debt is tipped to fall by £71 million to £1.1 billion. This represents net debt/EBITDA of 1.6 times. "We expect Babcock may consider returning cash to shareholders once this is reduced to 1 times," says analyst Joe Brent.

On Liberum's estimates, Babcock currently trades on a forward price/earnings (PE) ratio of around 9.5 times, which is a meaty 31% discount to the sector average of 14.3 times. With mid-single digit revenue growth expected in 2018, "the business is too cheap to ignore", adds Brent. He has a target price of £11.

Trading Statements

Shield Therapeutics, Science In Sport, Accesso Technology, Attraqt, Babcock

AGM/EGM

United Carpets, Alcentra European Floating Rate Income Fund

Thursday 21 September

Trading statements

Venture Life, Biopharma Credit, Quixant, Cambridge Cognition Holdings

AGM/EGM

WYG, Whitbread, Vietnam Holding, Twentyfour Income Fund, IG Group Holdings, Gloo Networks, Accsys Technologies, Auto Trader, Begbies Traynor, Circle Property, First Property Group

Friday 22 September

AGM/EGM

Accrol Group Hldgs, Sirius Real Estate, Mainstay Medical International

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.