Wetherspoons investors will be happy with a welcome increase in revenue in the 9 weeks to 2 October 2022 despite disappointing preliminary full year results.

Revenue in the 9 week period rose 10.1% compared to the same period a year prior. However, rising costs and supply chain issues saw the pub chain lose £30m over the full year.

Tim Martin, the Chairman of J D Wetherspoon plc, said: “previously reported increases in labour and repair costs and the potentially adverse effects of rises in interest rates and energy costs on the economy, firm predictions are hard to make.”

COVID Lockdowns

Wetherspoons investors have become accustomed to Mr Martin’s political punditry in market updates, and the Chairman did not disappoint in today’s release.

He took the opportunity to attribute the poor performance to the UK Government’s COVID policy and the release included references to studies that showed lockdowns did not prevent excess deaths.

Nonetheless, while earnings for the past year were impacted by lockdown, markets choose to look to recent positivity and JD  Wetherspoon shares were 12% higher at the time of writing.

“The results themselves yielded few surprises and it is encouraging to see a good uplift in sales so far in the first ten weeks of the current financial year. However, the question is how long this can go on for. Without doubt pubgoers have bigger hits to come to their wallet, be it from energy costs or increased mortgage payments,” said Derren Nathan, Head of Equity Research at Hargreaves Lansdown.

“JD Wetherspoon has its own cost challenges to face particularly when it comes to staff and maintaining the quality of its estate. With that in mind it is hard to see how further lockdowns are really the most tangible threat, and don’t anticipate a return to dividends any time soon given that net debt is hovering at close to £0.9m.”

Argo Blockchain shares sank on Friday as the Bitcoin miner released ‘strategic actions’ to strengthen the balance sheet as the company faced the challenges of higher power costs and low crypocurrency prices.

In a broad range of measures, Argo Blockchain appeared to be trying to raise capital in anyway they could, including selling off their mining machines, while continuing to host them at their Helios facility in Dickens County, Texas. Argo had previously announced a hosting agreement in August that gave Argo 25% of the net profits generated from the Bitcoin mined by the hosted mining machines.

Argo said they had also received a letter of intent from a strategic partners for a share subscription totalling £24m to help fund working capital and general corporate activities. The partner will have the right to appoint two non-exec directors to the board.

The subscription is limited to the partner meaning no other party will be involved in the capital raise.

Argo Blockchain shares sank 14% on the news to trade at 29p and lowest intraday levels since 2020.

“We have worked relentlessly to create and execute on a strategy that will support our objective of sustainable growth for the Company,” said Peter Wall, Chief Executive at Argo Blockchain.

“We also understand the importance of maintaining flexibility in our approach in order to respond swiftly to external factors. We are glad to have a strong relationship with our lender NYDIG, who has been working with us to provide flexibility and to help ensure the long term success of the Company.”

Argo Blockchain mined 235 Bitcoin or Bitcoin Equivalents in August and held 1,098 Bitcoin.

Ahead of its Capital Markets Day next Tuesday, Eckoh (LON:ECK) the Hemel Hempstead-based provider of customer engagement security solutions, has updated its investors upon its first half sales.

To the end of September, the group enjoyed a strong upward momentum, driven mainly by renewed activity in its US markets.

Big improvement in sales

Order levels at over £17m are believed to be some 50% better than at this time last year.

The company is stating that it has made good progress in its strategy to pursue major opportunities for large blue-chip organisations, cross-sell from a broader product suite and continue the trend towards cloud adoption and more international mandates.  

International appeal for its services

Eckoh is increasingly focusing on attractive sectors which are suited to its model, technology, and product suite. Its Customer Engagement Security Solutions enable enquiries and transactions to be performed on whatever device the customer chooses, allowing organisations to increase efficiency, lower operational costs and provide a true omnichannel experience.

From its offices in both the UK and the US, it is a global provider to an international client base. It has a large portfolio of clients across a broad range of vertical markets and includes government departments, telecoms providers, retailers, utility providers and financial services organisations.

Analyst Opinion – shares are a Buy

Kevin Ashton and fellow analysts at Singer Capital Markets are enthusiastically encouraging investors to attend the Eckoh Capital Markets Day on Tuesday 11^th October.

They are currently rating the group’s shares as a Buy having fixed a one-year Target Price of 92p on the group’s shares.

For the current year to end March 2023 they estimate sales of £40.0m (£31.8m), adjusted pre-tax profits of 7.6m (£5.2m) generating earnings of 2.0p (1.6p) and a dividend of 0.70p (0.61p) per share.

For next year they foresee £43.2m revenues, £8.3m profits, 2.0p earnings and a dividend of 0.80p per share.

Conclusion – a break above 50p very soon

This group’s brokers are very keen upon its shares.

They were as high as 64p in December last year, since when they have drifted back to a recent low of 37p a month ago.

Now at 44p these shares do have a growing following and, hopefully, the Capital Markets Day will impart enough information and enthusiasm as its brokers portray.

A break above 50p looks very achievable in the near-term.

The FTSE 100 retreated on Thursday in a second day of declines as investors digested the impact of OPEC’s decision to cut production by 2 million barrels.

Oil prices had declined steadily in recent months which has led to lower prices at the pump – a welcome saving as interest rates rise and household energy rates soar.

However, OPEC’s move to cut production will once again hurt consumers, just as winter heating bills start to erode household budgets.

The FTSE 100 was down 0.7% at 7,001 at the time of writing.

“With the oil price ratcheting back up there is also going to be more pain at the pumps to come, especially with fresh weakness in sterling. Brent crude is still hovering around $93, up around 10% in a week after OPEC+ countries agreed a cut in production at top of the range expected, by 2 million barrels of oil per day,” said Susannah Streeter, senior investment and markets analyst, Hargreaves Lansdown.

“Higher oil prices might be inducing a severe inflation headache for many countries around the world, but they have been a bonanza for oil producers and they want the good times to continue to roll. Saudi Arabia has justified the cut because of weakening demand in the global economy brought on the continual ramp up in interest rates.”

Yet there were signs this ‘bonanza’ was coming to end on Thursday with Shell signalling an end to extraordinary profits.

Shell was the biggest drag on the index following a revision to their outlook due falling refining margins. Having enjoyed the higher price of oil earlier this year, the oil major said indicative refining margins would be $15/bbl in Q3, compared to $28/bbl in Q2 2022 due to falling oil prices through the summer.

Shell shares fell 4.7% and BP dropped 1.6% in sympathy.

Imperial Brands

Imperial Brands was the FTSE 100’s top gainer, adding 3.6% after the tobacco and vaping company said they would return £2.3bn to shareholders through dividends and buybacks as they deliver on their five-year plan.

“Imperial Brands’ update would give you the impression nothing bad is happening in the world. The cigarette and vaping company has so much spare cash sloshing around that it is going to return £2.3 billion to shareholders via dividends and share buybacks. That’s 13% of its market value, which is astonishing,” said AJ Bell investment director, Russ Mould.

US jobs data

Markets will receive the latest instalment of US jobs data tomorrow and a signal of what the Federal Reserve may do next to bring soaring inflation under control.

Economists polled by Reuters expect 250,000 jobs to be added in September.

Shell shares fell on Thursday as the oil and gas giant released an outlook update that highlighted falling refining margins due to lower oil prices.

Shell said they were revising their indicative refining margin to $15/bbl, down from $28/bbl in Q2 2022. This is expected to cause $1.0bn to $1.4bn reduction in Q3 adjusted EBITDA.

Shell shares fell over 4% in the immediate reaction on Thursday.

“Shell enjoyed record profits in the first and second quarter spurred by a surge in underlying oil and gas prices following Russia’s invasion of Ukraine. However, since June, oil has posted four consecutive months of declines, with Brent crude down by around 25% even after this week’s countertrend rally,” said Victoria Scholar, head of investment at interactive investor.

Today’s news of OPEC’s 2 million barrel production cut has supported oil prices but its difficult to see a scenario where oil rallies to 52-week highs without an additional shock to global supply.

Indeed, a slowing global economy may act as a cap on oil prices in the coming months.

Renewable Energy

While refining margins are set to fall, Shell indicated Renewable Energy adjusted earnings could be between a $300m loss and $300m profit.

With the appointment of the new CEO and his background in clean energy, investors will be watching how this segment performs as the bumper period for fossil fuels comes to an end.

Shell has invested in a range of clean energy projects in recent years and the revenue generation capabilities of these assets will be used to gauge the success of Shell’s energy transition strategy.

Shell is set to release Q3 results 27th October 2022.