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16 Jul 2021
Record Q2 earnings season... but will it be enough?
Compagnie de Saint-Gobain SA (SGO:PAR), 0 | Wienerberger AG (WIE:WBO), 0 | Sika AG (SIKA:SWX), 0 | Ferguson Plc (FERG:LON), 17,075 | Travis Perkins plc (TPK:LON), 718 | Geberit AG (GEBN:SWX), 0 | Kingspan Group Plc (KRX:DUB), 0 | ROCKWOOL A/S Class B (ROCK.B:CSE), 0 | Armstrong World Industries, Inc. (AWI:NYS), 0 | Trex Company, Inc. (TREX:NYS), 0 | Owens Corning (OC:NYS), 0 | Ibstock Plc (IBST:LON), 150 | Forterra Plc (FORT:LON), 158 | Armstrong World Industries Inc Shs Unsponsored Brazilian Depository Receipt Repr 1 Sh (AWII34:BSP), 0 | ROCKWOOL A/S Class B (0M0A:LON), 0 | Invesco US Treasury Bond 7-10 Year UCITS ETF (TREX:LON), 0 | Wienerberger AG (0MKZ:LON), 0
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Record Q2 earnings season... but will it be enough?
Compagnie de Saint-Gobain SA (SGO:PAR), 0 | Wienerberger AG (WIE:WBO), 0 | Sika AG (SIKA:SWX), 0 | Ferguson Plc (FERG:LON), 17,075 | Travis Perkins plc (TPK:LON), 718 | Geberit AG (GEBN:SWX), 0 | Kingspan Group Plc (KRX:DUB), 0 | ROCKWOOL A/S Class B (ROCK.B:CSE), 0 | Armstrong World Industries, Inc. (AWI:NYS), 0 | Trex Company, Inc. (TREX:NYS), 0 | Owens Corning (OC:NYS), 0 | Ibstock Plc (IBST:LON), 150 | Forterra Plc (FORT:LON), 158 | Armstrong World Industries Inc Shs Unsponsored Brazilian Depository Receipt Repr 1 Sh (AWII34:BSP), 0 | ROCKWOOL A/S Class B (0M0A:LON), 0 | Invesco US Treasury Bond 7-10 Year UCITS ETF (TREX:LON), 0 | Wienerberger AG (0MKZ:LON), 0
- Published:
16 Jul 2021 -
Author:
Bromehead Yves YB | Roger Paul PR | Speak George GS | Whitworth Robert RW -
Pages:
41
What about the ''wow'' factor?
The upcoming results season is likely to unveil record-high earnings, surpassing consensus expectations once again. However, the recent rerating suggests the ''wow'' factor is priced-in on most names. Mounting inflationary headwinds and a more challenging base in H221 could lead to muted share-price reaction post results. We identify our key Q221 conviction ideas below.
After 355 years, a story reborn... ''I am Saint-Gobain''
Saint-Gobain remains our top conviction idea in the medium term, while the near-term outlook has never looked this promising. Despite having pre-released record-high margin expectations for H121 we think consensus is too conservative and stand +7% above it on FY21 operating profit.
Bricks and tiles going through the roof
The brick players Ibstock, Forterra and Wienerberger are likely to benefit from stronger than anticipated trends in the single-family housing market and incremental brick and tile price increases. UK roofing tile shortages is an overlooked tailwind for WIE near-term.
Distribution... winning the inflation battle near-term
Distribution companies such as Ferguson and Travis Perkins are the overlooked winners of the inflationary battle. Near-term margins are set to expand whilst booming construction trends should lead to disproportionate operational leverage.
2022... what''s not to like?
Feedback from our recent marketing suggest investors are worried 2021 is as good as it gets. Limited visibility into 2022 and stratospheric valuation multiples across the lightside universe are often cited. However, looking at recent developing trends we see attractive growth opportunities in 2022 including 1) the sharp rise in EU single family housing, 2) non-residential demand rebounding, 3) Recovery and Resilience stimulus packages supporting future renovation work and 4) a likely normalisation of raw materials which could support margins next year.