Anyone who thinks the arrival of July will lead to a slowdown in company news may have to think again. In fact, we can expect a flood of statements and results from many FTSE 100 shares next month.
Barratt Developments
It goes without saying that last week’s higher-than-expected hike in interest rates to 5% was not great for UK housebuilders. Indeed, I reckon the commentary from CEO David Thomas will be required reading when Barratt Developments (LSE: BDEV) releases its latest update on trading on 13 July.
It’s not rocket science though. Higher rates mean fewer potential buyers. That will inevitably hit profits at Barratt.
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As things stand, the shares currently trade on a forecast price-to-earnings (P/E) ratio of almost 11 for the 2024 financial year. Whether that’s good value really depends on just how much negativity we think is already priced in.
Clearly, the rising probability of a recession may have investors thinking that there’s worse to come, making this FTSE 100 share a potentially high-risk buy at the current time.
Personally, I’m slightly more optimistic. The reaction to the hike — and suggestions that rates could eventually climb to 6% — has been unpleasant, but not catastrophic. Year-to-date, Barrat shares are still roughly flat.
Armed with a long time horizon, I reckon the investment case here is actually quite attractive.
Unilever
Marmite-maker Unilever (LSE: ULVR) is another blue-chip that’s due to report next month.
Based on the behaviour of the share price over recent weeks, it doesn’t look like investors are expecting a spellbinding set of interim numbers on 25 July.
Again, this seems rational. UK inflation remains stubbornly high and consumers are looking for ways to save money. Hence we’ve seen a big jump in sales at value giants like Aldi and Lidl and switching to supermarket own brands. So evidence of stellar earnings growth may be asking for too much.
Still, I’m wondering if the market is too pessimistic. Sales of small-ticket treats of the sort Unilever produces should prove more resilient than expensive holidays or luxury goods. Selling its products in 190+ countries around the world, the company isn’t exactly dependent on the UK economy either.
What’s more, a P/E of 18 is also slightly below the five-year average. This suggests new investors might be getting a good deal.
Lloyds Bank
A day after Unilver reports, we get half-year results from arguably the most-followed FTSE 100 share — Lloyds Bank (LSE: LLOY).
Seen as a bellwether for the UK economy, Lloyds stands to benefit from interest rates galloping higher as net margin (the difference between what it pays out to savers and the income it generates from borrowers) will be greater.
However, we know that the bank is also very exposed to the mortgage market. In fact, it’s easily the biggest lender in this sector. Concerns over more people going into arrears could be why the shares have been losing height lately.
On a more positive note, Lloyds does have solid income credentials. A dividend yield of 6.5% is arguably sufficient compensation for the risk involved if capital gains aren’t a priority. Although estimates may end up being revised, analysts currently think this payout will be covered well over twice by profit.
A P/E under six also looks very cheap.
