Equities Update: Greggs, Vodafone, Alibaba..

Gregg’s investing in growth and sales jump

Adam Vettese, analyst at investment platform eToro, says: “Gregg’s seems to be keeping up some strong momentum as sales have jumped year-on-year but moreover, there is progress behind the scenes on the production side, allowing for further growth as capacity increases. Not only a nation’s favourite for sausage rolls, Gregg’s has also widened its product range and upped delivery and app sales. This, combined with more units popping up within other units for example at petrol stations, which are not often known for their prowess in terms of food offering, means consumers can even get their savoury snack fix while filling up or on the road.

“Cost inflation remains under the spotlight and a central part of Gregg’s appeal is to deliver value and keep prices low. This is expected to remain steady and provided there are no surprises in this regard, there is no reason why Gregg’s can’t continue to build on this strong start as the year progresses.”

Vodafone’s cost cutting crusade might be starting to pay off

Mark Crouch, analyst at investment platform eToro, says: “Vodafone investors may have been bracing themselves for another tumultuous earnings report this morning and while this might not have them jumping for joy, there are signs the business has turned a corner. Vodafone has reported a modest increase in organic earnings, with free cash flows exceeding expectations.  

“Cost-cutting initiatives have been front and centre in a bid to stem the tide of losses that has plagued the telecoms giant. Bogged down with rising debt, Vodafone has agreed to sell their underperforming Italian and Spanish units, and the decision to slash their dividend in half might not have been a popular one but seems like the right move.

“It is now a case of looking inward for Vodafone, taking stock of what they have and driving up efficiency. Vodafone’s strong position in Germany and exposure in Africa, Europe and the Middle East means that they are generating healthy free cash flow, and all sectors are now producing growth, with Vodafone Business proving to be a key growth driver.

“There was also good news of share buybacks for investors, which is another positive sign. This is something that Vodafone has confirmed will likely increase should the company maintain their current trajectory.”

A diverging tale of earnings from Alibaba and Tencent

Mark Crouch, analyst at investment platform eToro, says: “Alibaba saw a huge drop in profits for its fiscal fourth quarter, despite beating expectations with its revenue. Given the robust growth in sales, the shrinking profits will be very concerning for investors in the Chinese e-commerce behemoth and its shares are trading about 4.5% in the red in pre-market trading on Wall Street.

“Its share buyback programme may be helping to limit that drop, but with the magnitude of the slide in earnings, along with ongoing worries about Chinese consumer spending, its shares could be contending with heavy selling pressure.

“In contrast, tech conglomerate Tencent Holdings – which also has a finger in the Chinese e-commerce pie, alongside its main gaming revenues – posted sparkling earnings growth, as the company starts to reap the benefits of its corporate restructuring, with online advertising delivering a notable jump in revenue. Adding to the feelgood factor, the company announced a dividend hike and a pickup in pace for its buyback plan.”