Home Business NewsBusiness Deliveroo beats estimates, TUI remains resolute and Admiral sees profits drop

Deliveroo beats estimates, TUI remains resolute and Admiral sees profits drop

by LLB Reporter
10th Aug 22 11:23 am

All eyes will be on US inflation data released later today as this could have a major influence on the direction of the stock market. A higher than expected figure could weigh on equities as investors have simply had enough of the rising cost of living.

 The FTSE 100 dipped 0.2% ahead of the news while pre-market indicative prices pointed to a flat opening from US stocks. This suggests investors don’t want to risk taking any new positions until they get the inflation news.

Investors have become very nervous about tech stocks this year, for fear that high rates of growth may become harder to achieve. Cracks have been appearing in a range of areas, from online advertising to component shortages, affecting businesses and knocking them off course.

Danni Hewson, financial analyst at AJ Bell, said: “It’s therefore a pleasant surprise to see Deliveroo beat estimates, as it looked to be a prime candidate to serve up bad news. After all, if consumers are under increasing financial pressure, cutting back on a takeaway meals is an easy win and that would feed through to lower activity for Deliveroo.

“If you dig deeper into its latest results, there are still reasons to be cautious, however. Growth has slowed in the past quarter and the principal reason it managed to beat estimates was by cutting back on marketing spend. That might explain why the share price didn’t rally on the news.

“With summer holidays in full flow, everyone who isn’t sitting on a beach is no doubt dreaming of dipping their feet in the sea and kicking back with a cocktail in the sun. It’s therefore understandable that TUI is confident about holiday demand for the rest of the summer. Nonetheless, it cannot brush over the fact that flight disruptions are still a major thorn in its side.

“A big drop in profits is unusual for Admiral but comes as no surprise if you’ve already seen recent warnings from fellow insurers Sabre and Direct Line. Claims inflation has caused significant headaches in the motor insurance industry, fueled by used car prices shooting up, higher repair costs, fixes taking longer to complete and wages going up.”

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