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What to Expect from Ocado's Full Year Results

Tuesday 11th February

  • Sales £1.8 billion exp. vs £1.6 billion 2018
  • Pre-tax loss £143 million
The results come shortly after December’s update on the Ocado M&S partnership, which means that attention will be firmly on Ocado’s attempts to become an international player.

Solutions Division
The solutions division will attract the most attention in the full years results. This is where retailers pay Ocado to use its robotic warehouse and delivery system. This division has been ear marked as a key source of future growth making developments all the more interesting and new sign ups all the more important. Japan’s Aeon, one of the largest retailers in Asia has signed up which bodes well for the future, but also upped 2019’s operating costs by a hefty £25 million. 
Ocado has invested in tech- heavy fulfillment centers and is running at a pre-tax loss, which is expected to have widened. 

A bit of faith
Ocado’s share price has rallied over 34% across the past 12 months. Part of this rally has been owing to its diversification away from online grocer towards high tech international player. Although most of that rally happened around March and April last year and the stock has been trading sideways for the past 10 months.

Investors are waiting patiently to see whether Ocado can live up to its new tech stock valuation. The fact that they are willing to do so shows a level of confidence from the market. However, it also means that Ocado will need to execute its plan without any glitches, glitches which could send the share price sharply lower.

Levels to watch
The share price has just slipped below its 50, 100 and 200 sma on the daily chart. It is testing strong support around its current levels. A breakthrough here could open the door to 1173p (low 4th Dec), prior to 1120p (22nd Nov) and 1050p (low 13th Nov)
On the flip side near term resistance is at 1250p (200 sma), before 1280p (high 31st Jan) and 1320p (high 29th Jan). 

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