Equities Update: Severn Trent, Sage, Walmart…

Severn Trent post higher-than-expected earnings despite a current of discontent

Mark Crouch, market analyst at investment platform eToro says: “Despite battling against the current of political and public discontent, Severn Trent posted a higher-than-expected half year profit helped along by lower costs and an increase in customer bills.

“These days the UK’s water sector is rather a murky lagoon of scandal and controversy. Public pressure continues to mount on water companies to up their game in tackling the pollution of Britain’s rivers, as government intervention, which was once seen extremely unlikely, now looks to be a realistic possibility.

“Severn Trent maintains they are doing more than any of their rivals when it comes to investing in pollution prevention, and with the sector under the microscope, Severn Trent will need to show more tangible improvements in this area if it is to restore public and regulatory confidence.

“Swirling in the back of shareholders minds will be where the next growth phase comes from. Severn Trent has over the years cemented themselves into a dominant position and through cost-saving initiatives been able to deliver consistent shareholder returns. However, Severn Trent’s share price has been something of a damp squib in recent years, and despite occasional waves of volatility has struggled to surpass 2020 highs.”

Sage soars as profit beats

Adam Vettese, market analyst at investment platform eToro says: “Sage’s software produces payslips among other things and perhaps that’s exactly what they’re delivering to shareholders this morning. This update is ticking a lot of boxes – profits up by 21%, margins up and growing, dividend hiked and big share buyback programme announced. What’s not to like to investors?

“Shares are flying this morning and briefly touched an intraday record high before pulling back but are still up some 15%. Sage is already used by millions of small businesses who know and trust the product. The recurring revenue shows that, with product innovation also now including AI, the firm seems to be setting itself up for further growth.

“Tech has been the area to watch for sometime in the market in recent times and for various reasons there are relatively few UK-listed firms in the sector, but Sage is certainly flying the flag.”

Walmart delivers rosy results, raising hopes for holiday shopping season

Mark Crouch, analyst at investment platform eToro says: “Discount retail giant Walmart has delivered a healthy set of results for its third quarter, exceeding expectations for both sales and earnings, and hiking its guidance even further. It has enjoyed an undeniably strong quarter, with solid numbers whichever slice of the business you look at, but it is the performance outside of its traditionally core area of grocery that has been a particularly strong driver of growth. There was a fantastic showing from e-commerce, which saw sales soar 27% globally, while advertising business also saw a sharp pickup, jumping 28% for the quarter.

“Accordingly, Walmart has raised its outlook substantially and the company now expects net sales to grow 4.8% to 5.1% in fiscal year 2025. Its previous guidance, given in August of this year, was for sales growth of 3.75% to 4.75%, and this improvement in its outlook could be interpreted as an encouraging sign for US consumer sentiment as whole.

“Walmart is the biggest retailer in the US and analysts and investors alike naturally look to its performance as a quick guide to the prospects for the key holiday shopping season in the US. There are strong signals here that consumers are responding to moderating inflation and may, as a consequence, be feeling more upbeat heading into the holiday season. Shares in Walmart rose over 3% in per-market trading.”