Next week on the stock market

Admiral is the UK’s largest private motor insurer, with a strong track record of outperforming peers. Full-year results next week should reflect the changing insurance landscape. Mammoth price hikes over 2023 should start to feed through to the profit line over 2024, as customers roll on to new contracts. It’s been a bit of a balancing act, pushing through price hikes and trying not to lose too many customers in the process. We’ll be watching customer volumes closely.

Back at the half-year Admiral pledged a 90-95% payout ratio for the foreseeable. But that was before the recent acquisition of the home and pet insurance operations of RSA, which is expected to cost north of £100mn including potential add-ons. That could mean a lower dividend than markets were expecting – one to watch.

Greggs reports full-year results next week and we already know sales grew 19.6% to £1.8bn last year from the trading statement back in January. The focus will be on profit performance and the outlook for 2024. Markets are looking for profit before tax of around £168mn, which would be a 13% jump year-over-year.

On the outlook side of things, we’ll be looking out for details on further plans to expand the estate, increase delivery partnerships and drive more traffic through online and click & collect options. Inflation will, as always, be a topic for discussion. As price hikes slowed last year that caused a drag on growth, but retaining a low-cost product is essential for the Greggs proposition.

Melrose is a pure-play aerospace business, and its underlying revenue rose 18% in the four months to 31 October 2023. The group’s benefitting from sector-wide tailwinds like pent-up consumer demand for travel and a huge backlog of plane orders. In fact, last we heard it’s helped push the order book for the components it supplies to Boeing and Airbus aircraft to more than 12,000 parts, stretching all the way out to 2029. This gives the group great revenue visibility in the near term, and we’re keen to see if this demand has kept up over the final months of 2023.

In next week’s results, markets are expecting full-year revenue to land in at around £3.4bn, in line with the group’s prior guidance. Improved margins in the Engines segment, which were sitting in excess of 25% at the last count, mean profits will be in focus too. Melrose recently upgraded its underlying operating profit guidance by £25mn to a £400-410mn range, which looks within reach in our eyes.