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“The UK stock market bounces back on Tuesday with the FTSE 100 rising 0.3% to 7,064,” says AJ Bell Investment Director Russ Mould.
Ocado
“Forget the snow impacting Ocado’s earnings; the more interesting fact is the reduction in the number of items per basket.
“A reduced average order size is bad news for companies like Ocado. It isn’t really cost effective to be delivering small orders to lots of different houses.
“While it doesn’t give any figures for the average number of items per basket, it does say there has been a reduction. It also says this trend has effectively been offset by inflation pushing up the price of items, resulting in a 0.4% decline in the average order value to £110.45 for the 13 weeks to 4 March.
“On the other hand, the average number of orders per week is growing, up 11.1% to 280,000 in the trading period.
“There remains a lot of hype around Ocado and its potential for future growth. As such, its figures will be scrutinised in more depth than a business which has bigger scale and is more mature.”
Bellway
“There are few surprises in first half results from Bellway although a healthy increase in the dividend and a modest beat on profit helps to push up the share price.
“Although the company achieved an 8% increase in selling prices in the period, this looks unlikely to continue against the backdrop of a cooling housing market.
“Future profit growth is likely to be dependent on increasing volumes rather than house price inflation.
“Bellway has a solid track record in this regard but there are execution risks and planning issues to overcome in ramping up output of homes – its rival Berkeley recently noted the operating environment did not support a step-up in production levels.”
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