The week ahead: Whitbread, IAG

Monday 24 October

Trading Statement

Petra Diamonds

AGM/EGM

CPL Resources, McBride

Tuesday 25 October

Tuesday's first-half results for coffee-and-hotels leviathan Whitbread aren't likely to be terribly dramatic stuff, but there are hints the Costa Coffee owner's story is turning sour.

Barclays analyst Vicki Stern tips full-year earnings per share (EPS) in line with consensus, up 12% to 237p from 212p. She notes that, with a forward price/earnings (PE) multiple of 15.7, Whitbread will look cheap to some, especially since it recently traded on multiples around 20 and averaged 16 over the last six years.

But the forward picture for revenue per available room (RevPAR), a key sales measure for Whitbread's hotels, points to a "clear deceleration" in growth. The feeble sterling exchange rates won't help matters, as a weak pound has historically harmed rather than helped UK RevPAR numbers.

And the valuation doesn't look so appetising when you factor in the sluggish EPS compound annual growth rate (CAGR) forecast of 4.9% from 2016 to 2020, compared to 16% in the previous four years.

A 4% increase in Barclays' price target to 3,340p gives a 2017 forward PE of 13.7 - to reflect better-than-expected revenues over the summer - but it still implies downside from here.

"We expect results to confirm stronger RevPAR trends were evident over the summer, and with limited evidence of a material deceleration in UK regional RevPAR growth in Q3 so far, we doubt management will revise guidance at this stage," explains Stern.

To be specific, she's looking for "2.1% reported second-quarter RevPAR growth, Restaurants +1.9% like-for-like sales and +2.5% Costa" and £321 million of earnings before interest and tax (EBIT).

Trading Statement

BP, Norsk Hydro, Axis Bank

AGM/EGM

Mattioli Woods, Aberforth Geared Income Trust, Nimrod Sea Assets

Wednesday 26 October

Trading Statement

Antofagasta, GlaxoSmithKline, Earthport, JZ Capital Partners, Torchmark Corp, Mail.ru Group

AGM/EGM

Redde, Zibao Metals Recycling

Thursday 27 October

Samsung AGM - after Note 7 fiasco?

Trading Statement

Royal Dutch Shell, Redefine International, C&C Group, Stobart Group, Henderson

AGM/EGM

City Of London Investment Trust, Argos Resources, Blenheim Natural Resources, Premaitha Health, Standard Life UK Smaller Companies Trust, Samsung Electronics

Friday 28 October

International Consolidated Airlines rounds off the week with third-quarter results, and it's not been a great time for the carriers. A string of profit warnings from easyJet, and one from Ryanair more recently, have hammered share prices, and the slump in sterling is no help for the UK-exposed airlines.

A weak pound may dampen demand and downgrades are possible this winter, especially at easyJet and British Airways-owner IAG, say analysts. With industry capacity high, currently, and the year-on-year benefit of cheaper fuel all but washed through, margins and earnings look vulnerable in 2017.

Fuel prices are rising, too, and airlines will struggle. At its first-half results in July, chief executive Willie Walsh said visibility of revenue trends for the fourth quarter was "low". He warned of "low double-digit percentage" growth in underlying operating profit. Analysts had expected much bigger gains in line with the previous year.

However, during what is a seasonally strong period for equities, investors have been looking at bombed-out stocks like IAG, which now trade on very low valuation multiples. Its share price is up 11% in less than two weeks, and the forward price/earnings (PE) ratio is around six times. There's also a prospective dividend yield of around 5%.

Too good to be true? Maybe.

Trading Statement

Royal Bank of Scotland, International Consolidated Airlines, Berendsen

AGM/EGM

Ideagen, Reabold Resources

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.