Next week on the stock market

Next week we’ll hear how trading has been for the first half of Imperial Brands’ financial year. The group’s expecting low single-digit revenue growth over the full year and a mid-single digit uplift in underlying operating profit. But with hopes pinned on a stronger second half, initial numbers could be a little underwhelming. We want to see if full year guidance remains on track.

Imperial’s been offsetting volume declines in cigarettes with price hikes. There’s only so long that can go on for. The market will likely be seeking some reassurance that the pace of volume declines has slowed. The performance from Imperial’s fast growing but relatively small offering in Next Generation Products (vapes etc) will also be in focus. So will any rhetoric around distributions to shareholders, which we see as one of the stock’s key attractions. There can of course be no guarantee of any pay outs to investors.

Tesco’s had a better-than-expected year, and guidance was upgraded in January. Underlying retail operating profit is expected to be around £2.75bn, up from previous guidance of £2.6bn - £2.7bn. We’ll be looking for further proof of volume uplifts as price cuts continue as inflation tempers. With that in mind, it will be the outlook statement that holds the most weight where sentiment is concerned.

Free cash flow could also sway sentiment. We’re expecting the group to report £2bn of the green stuff pumping around the retail business. This underpins the ability to pay dividends – no returns are guaranteed. Ultimately, we’re looking for signs next week that Tesco is doing more of the same where pricing and market share growth are concerned. Any deviation from expectations is likely to be sorely punished.