Be Prepared For Lloyds Banking Group PLC’s Upcoming Results

A preview of Lloyds Banking Group PLC’s (LON:LLOY) upcoming half-year results.

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Lloyds Banking Group (LSE: LLOY) (NYSE: LYG.US) is due to announce its half-year results on Thursday next week (1 August).

At the time of writing, Lloyds’ shares are trading at 68p – up 31% from six months ago compared with a 6% rise for the FTSE 100.

When I previewed the full-year results of Lloyds and Royal Bank of Scotland six months ago, I explained why, in their cases, analyst consensus forecasts were all but meaningless. The range of estimates was so wide that “guess” was probably a more suitable term than “estimate”.

Should you invest £1,000 in Marston's Plc right now?

When investing expert Mark Rogers has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for nearly a decade has provided thousands of paying members with top stock recommendations from the UK and US markets. And right now, Mark thinks there are 6 standout stocks that investors should consider buying. Want to see if Marston's Plc made the list?

See the 6 stocks

Has the situation changed six months on? Let’s begin with a table of some of the key numbers.

  FY 2011 H1 2012 FY 2012 Forecast
H1 2013
Forecast
FY 2013
Forecast
FY growth
Underlying income,
net of insurance claims
£21.1bn £9.3bn £18.4bn ? £18.2bn -1%
Statutory earnings
per share (EPS)
-4.1p -1.0p -2.0p ?
Normalised EPS
(Financial Times)
5.02p 1.42p 5.68p ? 4.62p
(range: 2.0p – 6.9p)
-18.7%
Normalised EPS
(Morningstar)
-1.99p 1.02p ? 4.83p
(range: 2.0p – 5.1p)
+373%

Income

In the case of underlying income (net of insurance claims) there’s actually broad agreement: data providers the Financial Times, Morningstar and Digital Look all show a consensus forecast of around £18.2bn for 2013. As for the half-year, only the Financial Times provides a forecast: if the Pink ‘Un is right, £9.3bn is the H1 number to look out for next week.

Earnings

Unfortunately, the EPS picture remains as muddy as six months ago. Lloyds itself only gives us a statutory per-share number for earnings within its results. While this focus on the warts-and-all EPS is admirable, we don’t get management’s take on “underlying” or “normalised” EPS.

It’s possible to do some complicated calculations to come up with a normalised per-share number, but much is open to interpretation — as the historic EPS figures in the table above sourced from the Financial Times and Morningstar illustrate all too well!

The consensus EPS forecasts from the two data providers are a fair bit closer to each other at 4.62p and 4.83p — and a third data provider, Digital Look, isn’t too far off either at 4.44p. However, just look at the range of individual analyst estimates — sorry, guesses — that make up the consensuses in the table above.

In terms of valuation, at Lloyds’ recent share price of 68p, the prospective price-to-earnings ratio ranges from as high as 34 on EPS of 2p to as low as 10 on EPS of 6.9p.

So far as next week’s results announcement goes, we can only expect Lloyds to give us a statutory per-share earnings number as it has in the past. First-quarter statutory EPS came in at 2.2p — inflated by asset sales — and with further sales in Q2, the first-half number could easily be ahead of full-year consensus forecasts for normalised EPS.

Dividends

Analysts have different views on when Lloyds might resume paying dividends — and on the level of the initial payout. For 2013, the various consensus forecasts are 0.04p (Financial Times), 0.35p (Digital Look), and 0.83p (Morningstar). I don’t think anyone’s expecting a dividend to be declared for the half-year, though.

Meanwhile, if you’re in the market for companies that are already paying dividends — and handsome ones to boot — you may like to help yourself to the very latest free Motley Fool special report.

You see, this report tells you all about a great lower-risk income opportunity. The blue chip in question currently offers a 5.5% prospective yield, and the company’s management is expecting to grow that income at least in line with inflation in the years ahead.

Just click here to download the report — it’s free.

> G A Chester does not own any shares mentioned in this article.

But this isn’t the only opportunity that’s caught my attention this week. Here are:

5 Shares for the Future of Energy

Investors who don’t own energy shares need to see this now.

Because Mark Rogers — The Motley Fool UK’s Director of Investing — sees 2 key reasons why energy is set to soar.

While sanctions slam Russian supplies, nations are also racing to achieve net zero emissions, he says. Mark believes 5 companies in particular are poised for spectacular profits.

Open this new report5 Shares for the Future of Energy — and discover:

  • Britain’s Energy Fort Knox, now controlling 30% of UK energy storage
  • How to potentially get paid by the weather
  • Electric Vehicles’ secret backdoor opportunity
  • One dead simple stock for the new nuclear boom

Click the button below to find out how you can get your hands on the full report now, and as a thank you for your interest, we’ll send you one of the five picks — absolutely free!

Grab your FREE Energy recommendation now

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

More on Investing Articles

Older couple walking in park
Investing Articles

Could £300 a month invested in US and UK shares reach a million by retirement?

Could an investor retire with a million pounds just by dedicating £300 a month to US and UK shares? Mark…

Read more »

Young Caucasian man making doubtful face at camera
Investing Articles

Is £800 enough to start an ISA?

Is it worth bothering with an ISA with less than £1,000 to spare? This writer believes it may be --…

Read more »

Investing Articles

3 reasons Tesla stock may be a long-term bargain

This writer is keen to buy Tesla stock at the right price. He doesn't think it's there yet -- but…

Read more »

Investing Articles

Nvidia stock is a lot cheaper than before – or is it?

Nvidia stock has been caught in the whirlwind of market volatility. This writer has been waiting to buy, so might…

Read more »

Top Stocks

3 FTSE stocks Fools are eyeing up for choppy markets

A selection of companies listed on the UK stock market on the watchlists of four Foolish investors.

Read more »

Young Black man sat in front of laptop while wearing headphones
Investing Articles

A £10,000 investment in Rolls-Royce shares last week is now worth this…

Harvey Jones says Rolls-Royce shares couldn't escape the volatility of recent weeks, but wonders if the recent dip is a…

Read more »

The flag of the United States of America flying in front of the Capitol building
Investing Articles

Prediction: in 2 years these S&P 500 stocks will be much higher than they are today

These two S&P 500 stocks have been beaten down in recent weeks. But Edward Sheldon expects them to move much…

Read more »

Investing Articles

10% yields! Why a volatile stock market is great news for passive income investors

The recent stock market volatility has given passive income investors the chance to earn double-digit returns. But they still need…

Read more »