Aston Martin Lagonda, Royal Mail and Card Factory

“Dominic Raab’s resignation as Brexit Secretary didn’t go down well with currency markets, sending the pound down more than 1% against the euro and the US dollar. In contrast, the FTSE 100 was given a lift by global firms including miners which benefited from renewed strength in copper, aluminium and other metal prices. “Notable gains on the blue-chip index included some of the banks (HSBC), utilities (Centrica), consumer goods (Unilever) and tobacco companies (British American Tobacco). The FTSE 100 was up 0.5% to 7,071 in the first 90 minutes of trading, compared with a 0.6% decline in the FTSE 250 to 18,806,” says Russ Mould, Investment Director at AJ Bell.

Aston Martin Lagonda

“Bullish sales guidance isn’t enough to convince investors that Aston Martin is a share to own. The stock now trades 20% below its 1900p October IPO price as the market still clearly feels the business is overvalued.

“Its third quarter results include a big jump in sales, profit and unit volumes, prompting management to say full year sales should now come in towards the top of the guided range.

“While solid three months’ trading is certainly encouraging, Aston Martin’s story from an investment perspective is all about a rapid increase in production, plus delivering a wider range of products.

“The stock has been pitched as a fast-growth story so Aston Martin HAS to deliver rapid growth in each set of financial results in order to live up to its own hype.

“Investors may not like the news that its average selling price has fallen by 7% year-on-year, thanks to the launch of cheaper V8 editions of the DB11 and an entry-level Vantage.

“Significant investment will be needed to meet its growth ambitions so the market will be keeping a close eye on cash generation and its capacity to fund items like machinery upgrades across several production sites. Missing growth targets would be devastating to the share price and management credibility.”

Royal Mail

“A hike in the first-half dividend is something of a surprise at Royal Mail and looks like a sop from the delivery firm’s newly installed management to keep investors on side while they await a big strategy announcement in March 2019.

“The increase in the payout comes despite falling profit, increased debt and a significant cash outflow in the period.

“While there is little the company can do about the falling letter volumes, related as they are to external factors such as new data privacy rules pressuring marketing mail, weak productivity is a different matter.

“The company had already warned on its failure to deliver on hoped-for cost savings and this announcement also reveals that the promised improvement in productivity following an end to a long-running industrial dispute earlier this year is not being delivered. Productivity actually dipped 0.2% in the period.

“All in all, there is plenty for new chief executive Rico Black to ponder as he prepares to outline his plan for the direction the business will take over the next five years.

“The shares, having traded sharply higher in the wake of the 2013 IPO, are now almost back at square one, only slightly above their 330p issue price.”

Card Factory

“After a very difficult 2018 shareholders will greet today’s update from Card Factory with some cheer.

“Like-for-like sales are flat in a tough high street environment, but a strong online showing helps year-to-date revenue advance 3.4%. Full year guidance, which was downgraded earlier this year, is maintained.

“Historically Card Factory has been prized for its strong cash generation which enabled a steady stream of generous ordinary and special dividends, so a slight tick up in net debt may give investors pause for thought, even if it linked to a build-up of stock ahead of the festive period.

“Christmas performance will be key and investors will be watching the 11 January trading statement very closely.”

These articles are for information purposes only and are not a personal recommendation or advice.