Ocado Q3 Statement To Keep Investors Onside?
Spreadex | Sep 11, 2018 12:07
The first half of 2018 saw the online supermarket’s performance defined by its international tie-ups, as agreements with Canaca’s Sobeys, Sweden’s ICA and the USA’s Kroger (NYSE:KR) joining last November’s deal with France’s Groupe Casino (PA:CASP).
All this, and a positively received set of half year figures (more on those below), left the company tickling a record peak of £11.50 towards the end of July. Since then, however, some of the shine has come off the stock, with a downgrade for Group Casino by analysts at Bernstein and a £50 million share sale from the family trust of CEO Tim Steiner leaving Ocado Group PLC at a current trading price of £9.63.
Going back to the firm’s interim results, for the 26 weeks to 3rd June Ocado posted a 12.1% rise in group revenue to £799.9 million, with an 11.7% increase in retail revenue paired with a 16.8% jump in Solutions revenue. Yet it was the cost of expanding the Solutions division and attracting those aforementioned international supermarkets that contributed to the company swinging to a pre-tax loss of £9 million from 2017’s interim profit of £7.7 million.
Given that Mr. Steiner said back in July that the company doesn’t ‘have the capacity to do endless other deals’, the second half of 2018 is going to be more focused on the company’s financial performance. In that regard, then, investors will want to see a continuation of the firm’s double-digit revenue growth in Q3 – especially in the Solutions arm, which Steiner said would ‘very quickly’ overtake retail revenues – alongside an update on its full year guidance.
Ocado Group Plc(LON:OCDO) (LON:OCDO) has a consensus rating of ‘Hold’ alongside an average target price of £5.58.
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