Thursday preview: Premier Farnell, Spirit Pub

Shares in Premier Farnell rose sharply on Wednesday, the day before the electronics products distributor is scheduled to release full year results.

The rise may have been down to Shore Capital upgrading the shares from "sell" to "hold" or it may just have been market makers marking up the shares as a precaution, in case the results exceed expectations. Broker Panmure Gordon notes that Purchasing Managers Index (PMI) data has been on an improving trend and this is usually a good lead indicator for Premier Farnell.

"Q3 [third quarter] results were in-line with expectations with a small decline in adjusted PTP [pre-tax profit] to £21.1m. Gross margin was softer due to challenging comparatives and mix issues. Global PMI data at that time was tending to be below 50 [a value below 50 indicates a contraction of activity]; it has since shown some signs of improvement," Panmure Gordon observes.

Subscribe to MoneyWeek

Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE

Get 6 issues free

Sign up to Money Morning

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter

Sign up

"Recent Q3 results from [sector peer] Electrocomponents reported steady progress helped by market share gains and good exposure to MRO (maintain, repair, operate) markets," the broker added.

Panmure Gordon suggests the key issues in Thursday's results will be: inventory and working capital issues; trading back-drop against mixed PMI and industrial data; margin performance - US margins seem to be improving but are softening elsewhere; net debt.

On the subject of the latter, Panmure Gordon is forecasting an improvement to around £250m from a net debt position of £256m at the end of the third quarter.

Market consensus is for full-year pre-tax profit of £89.9m on sales of £973.3m, though the range of forecasts for PTP spans from £88m to £93m. Earnings per share are tipped to ease to 17.49p and the full year dividend is forecast to be 10.44p.

Spirit Pub Company, the managed pub company which demerged from Punch Taverns in August of last year, is set to release an interim management statement which will give like-for-like (LFL) revenue figures for the group's second quarter (December to February, inclusive).

"Although the quarter since 16th December will have some weather-related advantage, last week's result from Wetherspoon indicates that 2012 has indeed started quieter (by around 2% to the previous trend, in the case of Wetherspoon)," notes Peel Hunt.

"We would therefore expect LFL sales for the quarter to be up by only 3%, still reflecting the advantage of Spirit's progressive investment in the estate," the broker forecast.

At the end of the group's first quarter (Q1), Spirit had refurbished 108 of the 200 or so pubs it intends to spruce up in the current financial year. Peel Hunt thinks that number should now be approaching the 130 mark.

"In leased pubs, the quieter January and February may well have sent LFL net income below the -3.3% recorded in Q1. However, the shared services agreement with Punch expired at the beginning of March, giving the company more control over pricing and promotions in the period ahead. There should be around 10 conversions to managed (five at Q1), and perhaps 20 disposals completed or with solicitors, out of the 50 we forecast for this year to August," Peel Hunt added.

INTERIMS

Air Partner, Quayle Munro Holdings

QUARTERLY PAYMENT DATE

Canaccord Financial Inc., Canadian General Investments Ltd.

INTERNATIONAL ECONOMIC ANNOUNCEMENTS

Bloomberg Consumer Confidence (US) (14:45)

Continuing Claims (US) (13:30)

ECB Report (09:00)

Initial Jobless Claims (US) (13:30)

New Car Registrations (EU) (10:00)

Philadelphia Fed Index (US) (15:00)

Producer Price Index (US) (13:30)

Wholesale Price Index (GER) (07:00)

Q4

Premier Farnell

FINALS

Aegis Group, Fairpoint Group, Hill & Smith Holdings, John Laing Infrastructure Fund Ltd, Playtech Ltd., Plaza Centers NV, Powerflute Oyj (DI), Premier Farnell, Trinity Mirror, TT Electronics, Work Group

ANNUAL REPORT

Hunting, Lancashire Holdings

IMSS

Spirit Pub Company

AGMS

Banco Bilbao Vizcaya Argentaria SA, Chrysalis VCT, Domino Printing Sciences, Henderson Opportunities Trust, Sanderson Group

TRADING ANNOUNCEMENTS

Home Retail Group

FINAL DIVIDEND PAYMENT DATE

Sinclair (William) Holdings