Just to let you know that this is it for this week and indeed this month as I'm off for an Easter break now and should be back in April. So in the meantime may I wish you all a Happy Easter and I hope that you have a great time whatever you are up to.
Otherwise a couple of lacklustre updates from stocks which feature in the Compound Income Score Portfolio today. Firstly there were final results from Next (NXT) the high street and mail order clothing retailer. These on the face of it were fine with the earnings being slightly ahead and the dividend as far as I can tell with all the specials they have paid this year, being roughly in line.
Despite this though the shares are off this morning as the statement was relatively cautious as they flagged the coming year as being as tough as 2008. In the outlook they also said that the outlook for consumer spending does not look as benign as it was at this time last year. In this respect they highlighted a fall in the rate of growth of real consumer incomes from 3% or so down to closer to 1.5% to 2% and suggested that perhaps consumers were spending their increased income on other things. It is interesting that Next have joined Restaurant Group in warning about slowing consumer spending, but it does beg the question of who or what is seeing the benefit or is everyone seeing a slowdown as consumers have turned more cautious on the back of all the recent Brexit / global slow down scare stories?
Any way on current forecasts for this year after the fall in the price of the share this morning to around 6070p, they may trade on around 13x with a 5%+ yield although both of those could change on the back of downgrades and more buy backs rather than special dividends, given the lower share price.
At this level though, having fallen out of the 7000p to 8000p range it looks like it has broken down into the 6000p to 7000p range with some possible support towards the bottom of that range where it is now sitting and the rating being more reasonable now too. So they are probably a hold down here although I note on the Compound Income Scores, before today's results, they were coming out in the low 80's which means they will be at risk of dropping out of the portfolio at the next quarterly screening, especially if they see some downgrades post these numbers, which may not be ideal but that's the nature of a mechanical screening process.
Meanwhile Renishaw (RSW) a metrology and CAD business has as far as I can tell put out an unscheduled trading update because it seems they have seen a slowdown since they reported in January which could lead to a short fall in their profits of up to 10% based on the range of £67m - £83m for Pre tax profits which they have included in this statement.
This therefore explains why they have put the statement out and it is unsurprising to see them off by around 10% as a result. It does however potentially leave the price exposed to further falls if investors worry that there could be more downgrades to come and as it is quite an illiquid share. The rating is also relatively high at around 18 to 19x with a yield of only a little over 2%. Thus while it is probably a quality Company for the long term, the rating doesn't leave much room for further disappointment if sales and growth in the global economy should continue to disappoint. While on the chart below I note recent lows were around the 1600p level.
On the CIS prior to this, given the quality and growth historically it scored in the 90's but the resultant downgrades could spike the score down in the short term which may also leave it vulnerable to exiting the portfolio too at the forthcoming review. This may be no bad thing in the short term though as I also note that, despite the recent relief rally in the shares after in line interims, the 12 month price momentum as well as the estimate revisions are negative which is not a great combination for a highly rated growth stock.