Imperial Brands earnings preview: leaderless firm lacks direction

When are Imperial Brands results due?

Imperial Brands will unveil their full-year (FY) results on Tuesday, 5 November.

Imperial Brands results preview: main talking points

Imperial Brands have been in the headlines of late, with chief executive officer (CEO) Alison Cooper announcing her resignation in the wake of a downgrade to both sales and profit forecasts. Under her leadership, the firm has made a push towards the vaping market as trends signal a potential decline in their traditional tobacco market.

However, that push into the vaping business has not been the easiest, with investment in their Blu vape offering coming at a time when we have seen a number of deaths which have prompted a ban on flavoured products in the US. Meanwhile, we have seen the likes of Walmart ban e-cigarettes altogether.

Some speculate that we could see traditional tobacco products making a resurgence, while there is also a possibility that this will push customers towards the heat-not-burn segment. Ultimately, traders will be on the lookout for how each of these segments are faring as they seek to determine where the business is likely to focus on when the new CEO is appointed.

What to look out for in Imperial Brand’s earnings

One of the big numbers to watch will be the dividend return, with some speculating that we could see the final dividend figure cut in response to a weaker outlook. Markets are currently expecting £2.07 per share, compared with £1.88 last year.

Elsewhere, look out for sales/revenues which are expected to rise from £8.719 million to £8.989 million. Earnings before interest, taxes, depreciation and amortisation (EBITDA) is expected to rise from £3.979 million to £4.119 million. Finally, earnings per share (EPS) is expected to rise from £1.43 to £2.24.

What do the analysts say?

There are currently 20 analysts covering the stock, with ten ‘Buy’, six ‘Hold’ and four ‘Sell’. The current target price of £24.72 is 42% above the current £17.45 price.

Imperial Brands share price: technical analysis

Imperial Brands shares have a hit a eight-year low this week, with the stock dropping back into the £17.36 support level after a shallow retracement. That looks to continue the wider bearish trend, yet it is worthwhile watching to see whether we break below trendline support or not to signal whether we are going to see a ramp up in selling.

On the daily time frame, we can see this confluence of support with greater detail. Given the price is back at that key support zone, it is crucial to watch and see whether we will reverse higher to remain within this long-term wedge or break lower with wider bearish consequences.