When investing in the stock market, many a smart investor will jump on (or off…) past performance without looking at the future outlook. Those that saw Lloyds Banking Group’s results and went long would’ve suffered. Likewise those that saw Barclays today and sold out of their position off the back of a ‘disappointing’ set of numbers would’ve missed out on a further 8% of profits. Buying shares is like buying a house. Much like the estate agent that conveniently forgets to show you the dry rot under the floorboards of the house that’s a ‘great buy’, companies all too often gloss over the negatives in their reports. We take up the floorboards of company earnings to ensure that our clients don’t miss out.

Nonetheless, reporting season rarely fails to provide excitement and this one’s been no exception. Companies have updated markets on their H1 2016 performance and, as we’ve highlighted so often before, the devil has resided in the detail throughout. Take Lloyds Banking Group for example – profits doubled on the same period last year while the bank announced more cost cutting measures to protect its generous dividend. But markets saw a conflict in the announcement – a strong balance sheet but more aggressive cost cutting plans – and got suspicious. Does management know something we don’t? No, but it is preparing itself for something.

If the Bank of England cuts UK interest rates next Thursday, as many think it will, then Lloyds will definitely be wanting to cut more costs although it’ll be in a strong position to take on that challenge. If the BoE holds off, however, then Lloyds Banking Group could present a great growth opportunity with shares currently priced at about 53p, that in addition to an already decent dividend. There’s good reason to suspect the central bank will indeed use alternative means of stimulating the economy that are kinder to already downtrodden banks and financials. Our head of research’s Analyst summary will tell you more!

As an execution only broker, we’re proud that our service includes a comprehensive research offering to support clients in their day to day interactions with the markets. Our analysts will work tirelessly to pick apart the inner workings of company results, central bank updates and the resulting share price movements and put it all into plain English for you. To trial our research for yourself, click here. The trial lasts for two weeks, after which it simply stops. It’s what sets us apart from the competition and we’re sure you’ll find it useful!

Pearse Carson, Trader, 29 July