Earnings Opportunities in 5 UK Stocks

These five names due to report earnings updates next week are worth a closer look from investors, writes Alan Oscroft of Motley Fool UK.

Wolseley
Wolseley (London: WOS), the heating and plumbing supplies distributor, will be issuing full-year results on Tuesday, and it's been a bit of a successful recovery story of late.

Profits plunged in 2009, and early that year the shares reached a low of 497p. But after dropping further the following year, profits have turned around and the shares have recovered to 2,623p, making them a five-bagger.

Earnings growth of around 13% is expected for the year, but much of the recovery looks to be already in the price, with a forward price-to-earnings (P/E) ratio of 16 looking a bit toppy. And the expected dividend yield of 2% is nothing to retire on.

But being so international—only about a fifth of Wolseley's business is in the UK—it could provide a good barometer of the West's economic situation.

St. Ives
Print and publishing firm St. Ives (London: SIV), which is also due to release full-year results on Tuesday, looks interesting—if for no other reason than that current forecasts are suggesting a dividend yield of 7%, rising to 8% for next year, and expecting it to be around three times covered by earnings.

And at the current price of 79.5p, those forecasts suggest a year-end P/E of just 5, which seems very low. I don't know what the catch might be, but I intend to do a bit of digging.

Net debt at the interim stage was only £9.6m, which isn't much for a £94m company, so I'll be paying close attention to those results when we see them—according to last month's trading statement, they should be in line with expectations.

Tesco
Love it or hate it, Tesco (TESO) is major news for investors, and the UK's biggest supermarket is due to report interim figures on Wednesday.

The full year ends February 2013, and the consensus of City analysts put the shares, currently priced at 340p, on a forward P/E of 10, falling to 9.5 on 2014 forecasts, which is low. And dividends of around 4.5% are expected this year and next.

Warren Buffett has a big investment in Tesco, but since its poor Christmas trading last year, a lot of people think the wheels might have come off the company's previously inexorable growth.

But I think the doomsayers are seeing things too narrowly, and one promotional season gone wrong is not the end of it all. And the big thing many people miss is that Tesco is increasingly an international operator, with a third of its business already outside the UK.

I think Tesco is cheap, but then I would as I have it in the Fool's Beginners' Portfolio—bought for 305p, it's now up 11.5%.

Halfords
We should have a pre-close announcement from Halfords (London: HFD), the cycle, car parts, and motor maintenance firm, on Thursday.

And it's a share I'm particularly interested in, having been bullish about it a couple of years ago but getting it badly wrong—the company has suffered from the economic downturn and the shares have crumbled. They reached a low of just 189p this year, but have come back a bit to 260p today.

Is it still a good company, fundamentally? I think it is, though there is an earnings fall of more than 25% forecast for the full year to March 2013.

The current dividend forecast suggests a yield of over 7%, but that will only be barely covered by earnings—so either earnings need to substantially recover, or the dividend will surely face a cut (and there isn't any net cash on the books to really justify maintaining a high payout if it can't be covered).

KCOM
Another company that I've been following for quite some time is KCOM (London: KCOM), the former Kingston Communications, which will provide us with a trading statement on Friday ahead of interim results due on 27 November.

KCOM, which provides a range of telecommunications services to business and domestic customers, is one of those companies that just keeps on growing its earnings at a steady pace, doesn't take on much debt, and pays a good dividend.

With the shares on 84p, the forecast full-year yield is over 5%—and that's after the share price has gained 30% since mid-May.