Persimmon sees completions at top end of guidance, Warner Bros Discover slashes valuation of cable channels and Deliveroo delivers profit and cash flow

“The FTSE 100 gave back a big portion of the gains chalked up on Wednesday as global markets remain jittery after the recent sell-off,” says AJ Bell investment director Russ Mould.

“There will be concern that a positive start to trading on Wall Street on Wednesday faded fast with all eyes now turning to today’s session and whether last night was just driven by a few big earnings disappointments or represents the start of a new downtrend.

“Barratt Developments’ deal to acquire rival Redrow may be under scrutiny from the competition authorities but the fact concerns centre on just one specific area in Shropshire mean a remedy which can smooth the deal’s passage shouldn’t be too hard to deliver.”

Persimmon

“News leading housebuilder Persimmon delivered completions at the top end of its previous guidance will be music to the ears of a new Labour government which has prioritised increasing the supply of new homes.

“But, while Persimmon did specifically reference recently loosened planning laws alongside its first-half results, the big driver is ultimately signs of improved demand – with the Bank of England’s first rate cut representing a significant moment.

“The housebuilding sector is heavily reliant on the availability of affordable mortgages and, from that point of view, the trajectory of borrowing rates is heading in the right direction.

“Continuing build cost inflation and a fairly soggy property market helped constrain margins in the first six months of the year and investors will increasingly want to see evidence of these green shoots translating into improved profitability.”

Warner Bros Discovery

“Media group Warner Bros Discovery revealed the pressures on traditional television overnight as it slashed the valuation of its cable TV networks like TNT and CNN.

“The fairly drastic action reflected the change in circumstances since WarnerMedia merged with Discovery in 2022, with the latest quarter showing the impact of shrinking audiences as customers cancelled their subscriptions.

“Like others in the industry, the company is developing its streaming offer but that market is heavily saturated and it could be a painful transition as lucrative pay TV subscribers continue to slip away.”

Entain

“Ladbrokes and Coral owner Entain has been in a bit of a mess for some time, so investors will take succour from the company’s latest results.

“Yes, the company is still losing money at the pre-tax level, but the scale of these losses has been significantly reduced and the company has notably upgraded its outlook. 

“This provides some decent foundations for incoming CEO Gavin Isaacs’ efforts to revive Entain’s fortunes when he takes charge at the beginning of next month. He won’t be able to duplicate the benefit the company enjoyed from Euro 2024 and there is still plenty on his to do list. 

“This includes navigating a tricky regulatory backdrop which impacted the company’s performance in the UK in the first half of the year.

“It also involves injecting some new life into its US joint venture BetMGM. The American market is seen as a major source of opportunity but, despite putting in material investment across the pond, the venture is struggling to make any progress on market share.”

Deliveroo

“Food takeaway platform Deliveroo served up a significant milestone with its results for the first six months of the year as it delivered its first half-year profit since joining the market in 2021. 

“Significantly, this was also backed by positive free cash flow which, unlike profit figures, cannot be massaged to give a more favourable picture of performance. 

“The shares have really struggled since early optimism in the wake of its IPO evaporated with concerns ranging from regulation, competition and slowing demand as consumer habits changed coming out of the pandemic.

“The company is now seeing improved demand and has sufficient confidence to announce a material share buyback programme. A change to listing rules, which effectively allow for the sort of dual class share structures which provide Deliveroo founder Will Shu with greater voting rights than ordinary shareholders, might pave the way for the company’s entry into the FTSE 250.”

These articles are for information purposes only and are not a personal recommendation or advice.