With inflation stubbornly stuck above 10%, I’ll be paying particular attention to three FTSE 250 consumer-facing companies that are scheduled to update on trading next month.
Marstons
Pub group Marstons (LSE: MARS) releases its latest set of interim numbers on 16 May. Thanks to the aforementioned cost-of-living crisis and the likelihood that more people are staying at home rather than going out, I wonder just how good they will be.
Certainly, the share price has been in awful form, dropping over 50% in the last 12 months.
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But there’s a bigger problem with the investment case, in my view. Even if Marstons’s shares do fly from here following an upbeat outlook statement (possibly in anticipation of warmer weather), the huge amount of debt on the balance sheet — £1.6bn at the end of the last financial year — makes me nervous.
Perhaps I’m being overly pessimistic. We know that people will drink through good times and bad. Marstons’ pub estate is also largely freehold too.
Even so, there are no dividends on offer here to keep me patient. For this reason, I consider May’s update required reading but only as a way of gauging consumer sentiment.
Watches of Switzerland
There was a time when luxury retailer Watches of Switzerland (LSE: WOSG) could do no wrong.
Flush with Covid-19 savings, many people engaged in ‘revenge shopping’ when restrictions were lifted. A fair bit of that cash ended up in this company’s tills. The share price from 2020 to the end of 2021 was, consequently, a thing of beauty.
Unfortunately, things have been far less comfortable for holders since. And, similar to Marstons, there hasn’t been any income stream to soothe the pain.
On a more positive note, the stock does look far better value than a year or two ago. A forecast price-to-earnings (P/E) ratio of 14 for the new financial year (beginning 1 May) is attractive, considering the company’s rising margins.
For this reason, I wonder if the trading update for Q4 and the full year on 17 May could see buyers return. The fact that Watches reported a 17% rise in reported revenue in the previous quarter certainly bodes well.
In the meantime, investors can salivate over Tuesday’s rumour of a possible bid.
Pets at Home
A third FTSE 250 firm that I plan to check in on is pet product retailer and services provider Pets At Home (LSE: PETS). Full-year numbers from the company are due on 25 May.
By contrast to the other two stocks mentioned here, the £1.8bn-cap business has been in fine form lately. Shares are up almost 30% since the beginning of 2023.
Has the stock climbed too high, too fast? Well, the gains certainly put those of the index to shame (not even +1%). A P/E of 18, while not yet excessive, doesn’t scream value either. So there could be some profit-taking ahead, even if results hit expectations.
On the other hand, Pets At Home strikes me as a particularly good stock to hold at times like this. Spending on furry companions tends to stay fairly resilient and ownership rocketed during lockdowns.
Throw in a projected 3.3% dividend yield and I’d be happy to buy a slice of this company if I had the cash to do so.
