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Sodexo published market-beating quarterly revenue and reiterated its FY guidance, despite the increasing inflationary impacts from its last communication. Despite a share price upturn, we don’t expect major changes to the current consensus and our valuation.
Companies: Sodexo SA
Sodexo reported a stronger-than-expected H1. However, the stock declined by c.10% yesterday (biggest faller in the Stoxx 600) following the de facto narrowed guidance, affected by the war-driven inflationary pressure and lingering pandemic impacts. Despite the (already) strong absorption capacity, market concerns have increased due to the massive geopolitical uncertainties. Additionally, the lack of any strategic or longer-term ambitions/positives have also frustrated the market, given the first
The founder family will henceforth have important influence on both the board and top management. Such a governance profile might be unfavourable for floating shareholders, reflected by today’s market reaction (-5%).
Sodexo reported slightly stronger-than-expected Q1 revenue and maintains its FY22 guidance. We suggest that the early effects of Omicron in December was rather mild and had made the group believe that the related disruption might be absorbable. This reassuring signal released by the first contract caterer should please the market.
Sodexo delivered consensus-beating FY21 results, despite the higher-than-guided but in line underlying profitability. Its FY22 outlook is also broadly in line with analysts’ expectations and our forecasts. Nevertheless, the market applauses (share price +7% this morning) the group’s strategic planning and the much higher-than-expected dividend proposal, which support and reflect its confidence in future cash generation.
The group’s unexpected and sudden termination of the contract with the current CEO Denis Machuel, without finding the new one, discourages the market.
Sodexo reported a stronger than expected organic revenue growth in Q3 and upgraded its H2 guidance, considering a better outlook, especially in the Americas. Other contract caterers should also benefit from this positive market trend.
Sodexo released better-than-expected H1 underlying results, highlighting the supportive margin. However, its short-term performance should continue to be affected by the volatile market situation.
The French contract caterer Sodexo has released Q1 revenues in line with expectations and an upbeat H1 outlook amidst the still severe COVID-19 impacts. Market consensus is expected to be inspired.
The Q3 results beat the market, but the company now issues a more pessimistic forecast for Q4. A recovery should probably take longer than previously expected for the catering business.
The stock beat the market with its H1 results by managing to absorb a mild COVID-19-related impact, while the latter will become more severe in H2.
The seemingly satisfying Q1 results lost their attraction without the contribution of the better-than-expected Rugby World Cup. Sodexo sees a softer Q2 but still retains its FY guidance.
After delivering FY results above the market consensus and previous guidance, Sodexo announced a raised growth target for next year.
The group recorded better than expected 9-months top-line growth, mainly driven by the continued good improvement in North America and solid performances in Europe and the rest of the world.
However, management expects more modest growth in Q4, due to some contract losses and a more challenging comparable base.
The share price has been over-encouraged by the good figures since the beginning of the year, but more time is needed for a full turnaround.
Sodexo has experienced a good first half. The stabilisation in profitability and the progressive improvement in growth in North America have given us more confidence. Although the operating margin was still under pressure, due to the timing disparity between productivity gain and investment, we believe the company is going in the right direction.
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Caretech Holdings has left AIM.
What’s cooking in the IPO kitchen?**
Streaks Gaming plc, a UK-based provider of conversational gaming products intends to join the Standard Segment of the Main Market this autumn. The flotation is expected to value Streaks at approximately £10.2m (pre-money) and will make it the first LSE-listed "pure-play" conversational gaming company. Raising between £5-10m.
Companies: ZIN SKL EMAN RBD BGO BOO BOD
Companies: ScS Group plc
Hostmore delivered a marginally better than expected H1, but it’s not been a great start to H2 and the cold reality is that the consumer environment has worsened, putting pressure on revenue, with cost inflation – especially energy – also rippling through the P&L. Sensibly, Hostmore is slowing its opening programme to protect cash; it’s highly cash generative with plenty of financial headroom, and this should put it in a good position to exploit market opportunities when the time is right. We ar
Companies: Hostmore PLC
Companies: Tortilla Mexican Grill Ltd.
Companies: NTQ MORE POLB BILN
In the September edition of Zeus’ Video Games quarterly report, we review sector M&A activity in 2022 alongside our regular valuation and performance analysis.
Total 2022 YTD deal volume across the US and Europe (186) is at elevated levels, already second only to 2021. The total number of video games deals rebounded significantly to 81 in Q3 from 28 in Q2, according to our transaction screening. US average deal value reached a record high of £209.5m (joint with that achieved in 2020) on a re
Companies: DEVO GILD TBLD
Brighton Pier Group (BPG) performed strongly during the 12 months to June 2022, which resulted in the company beating forecasts that had already been twice upgraded (FY22E Adj EBITDA of £6.5m originally forecast vs £10.8m ultimately achieved). All divisions performed well, with trading boosted by pent-up consumer demand and government support packages. The outlook appears more muted, however, driven by elevated inflation and the widely documented ‘cost-of-living crisis'; consequently, we lower o
Companies: Brighton Pier Group Plc
Companies: XP Factory PLC
Companies: City Pub Group PLC
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Dish of the day
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Leavers: No leavers today.
What’s cooking in the IPO kitchen?**
Streaks Gaming plc, a UK-based provider of conversational gaming products intends to join the Standard Segment of the Main Market this autumn. The flotation is expected to value Streaks at approximately £10.2m (pre-money) and will make it the first LSE-listed "pure-play" conversational gaming co
Companies: MEX RBBS BBSN JADE LTG PCIP
Guild has signed its largest sponsorship agreement to date with Sky UK Ltd (Sky). The three-year global sponsorship is one of the largest ever esports sponsorships signed in Europe and is Sky’s first agreement with an esports organisation. We estimate the new contract could drive Guild into cash profitability before payments to Footwork Productions. In addition, the sponsorship’s high profile may accelerate the signing of other deals in Guild’s growing pipeline. Sky follows other premium brands
Companies: Guild Esports PLC
Pendragon’s interim results show underlying PBT of £33.5m (H1 2021: £35.1m), in line with the numbers flagged in a trading update on 20 July. This is a strong performance given the removal of £8.3m of government support and £7.0m of incremental marketing spend to grow the used car proposition. FY22 trading is expected to be in line with Management’s expectations, despite macro uncertainty and supply shortages, so Zeus headline forecasts are unchanged. We remain comfortable with our 38.6p per sha
Companies: Pendragon PLC
easyJet’s Q3 trading update should be defined as mixed as we see severe negative impacts from the airport chaos, but the encouraging traffic figures, good hedging and further improved liquidity and net debt positions are worth noting. We might downgrade further our estimates to a small extent for the current FY and a further cut for the next FY is not impossible as Heathrow warns of a potential passenger cap for summer 2023.
Companies: easyJet plc
The warmer weather and return to social events has boosted the demand for summer clothing. Next has slightly raised its FY22 guidance for both top-line growth and profitability on the back of better-than-expected full-prices sales in Q2 22.
The group still expects an inflation impact on consumer spending to worsen in the second half.
Companies: Next plc