Can Ocado (LON:OCDO) reverse its supermarket slump with Thursday’s Q4 update?
Up until the middle of the summer the now-FTSE 100 firm was having a fantastic 2018, fuelled in large part by May’s deal with US grocery giant Kroger (NYSE:KR). Since hitting an all-time high of £11.64 towards the end of July, however, it has pulled back a fair amount, tumbling to 6 month lows of £7.38 in late-November. Ocado Group PLC now sits at a current trading price of £7.90.
The firm’s last trading statement came in mid-September, when it laid out details of its third quarter. For the 13 weeks to 2nd September, retail revenue climbed 11.5% to £348.6 million, a minor slowdown from the first half’s 11.7% growth, while its average orders per week jumped 11.4% to 283,000. The one slight duff note was the lack of movement in average order size, which came in just one penny higher at £106.26.
More recently Ocado updated on its aforementioned agreement with Kroger. At the end of October it revealed that the US firm is expected to order 20 Customer Fulfilment Centres over the first 3 years of the deal, with the initial 3 CFCs set to be ordered by the end of 2018.
Confirmation of those first 3 CFC orders will be welcome on Thursday. Beyond the Kroger deal, investors will want Ocado to avoid any further drop off in the pace of its retail revenue growth, alongside an idea of how much exactly the company’s international expansion will impact its full year earnings.
Ocado Group PLC has a consensus rating of ‘Hold’ alongside an average target price of £6.90.
Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved.