Daily Stock Market Report (Thur 22nd Oct 2026) - BMY, ARBB, CAM, REC, ESNT

No major financial news overnight, so I thought I’d mention something less serious: the news that AirBnB won’t let hosts require their guests to clean their properties any more.

I’ve never had a really bad AirBnB experience, but it’s also been a few years since the last time I used one.

I think my issue with the platform is that you end up spending hotel-like prices, but then you don’t get an experience that matches up with hotel expectations. I’d rather stay in an average hotel.

So I’m pleased to see that the platform is now requiring hosts to treat its guests more like the paying customers they are: from next month they can no longer tell guests to wash and put away dishes, strip beds and do laundry, or carry garbage to outside bins.

The funny thing is that in most cases, customers have already paid something called a “cleaning fee”! Why did hotels never think of that?

Overnight market movements:

• The FTSE is down 0.4% at 10,700

• S&P 500 is down 0.8% at 7,700

• Brent crude (December) is up 2.5% at $110.50/bbl

• Gold is down 1.2% at $4,090oz

• Bitcoin is down 2.2% at $82,700

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Mark Simpson and Dr. James Fox are writing the company analysis today.

The Agenda is complete. Spreadsheet accompanying this report: link.

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Companies Reporting

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Mark's Section

Bloomsbury Publishing (LON:BMY)

Down 9% at 615p (£548m) - Interim Results - Mark - AMBER/GREEN  ↓

Context:

Bllomsbury was a big winner for holders coming out of the COVID period, with the shares delivering 3x returns to the end of 2024. However, the recent share price performance has been choppy:

Interest in the stock has been reinvigorated by an upgrade to FY27 forecasts earlier this year:

This trend led Roland to upgrade our view to GREEN when the FY26 results were published in May.

However, going into the H1 results, the share price had risen over 40% on a FY27 consensus that had only risen by 13%. The FY28 consensus had been slightly downgraded during this time. The net result is that the stock doesn't look particularly cheap, and the company goes into these results with high expectations from investors for further upgrades:

H1 Headlines:

While not an upgrade, the in-line headline gives initial reassurance:

Bloomsbury is pleased to report first half revenue of £151.6m with profit of £16.8m and a strong start to the second half of the year, underpinning the Board’s confidence in delivering record results for the full year.

However, I am always a little suspicious when no comparatives are quoted.

Percentages are still missing from the comparative table, but my maths suggests that revenue is down 5% and Adjusted PBT down 30%.

The context suggests that this was a weak half for both the Consumer division and the Academic & Professional one:

While they say:

A&P revenue is up 5.9% to £48.8m (H1 2025/26: £46.1m), showing encouraging signs of recovery

Operating profit in this division is down significantly:

Caused by much lower margins:

It may be too soon to conclude that the recent upward trend in margins in the A&P division is about to reverse. However, the risk that the previous two halves were anomalously high increases.

Adjustments:

As well as profits being down, the level of adjustments required to get there has also increased:

While amortisation of acquired intangibles is largely flat, there has been a big jump in restructuring costs. While these are probably the right thing to do and should drive improved profitability in the future, this doesn't suggest a business firing on all cylinders. Their narrative around this doesn't suggest that this process is complete:

We are progressing with key operational changes to support growth and enhance profitability through financial efficiencies. In April 2026, we announced a restructuring, and we have taken the first steps to simplify and streamline our structure. This has enhanced agility, accountability and positions the Company for continued expansion.

[my emphasis]

That the company appears to have repeated integration and restructuring costs, and is guiding for these to continue, makes these look far from one-off.

At the very least, the company wants us to give them the benefit of all the cost savings without counting any of the costs of achieving those savings against them.

Outlook:

Despite the weak half, the company say they are in line for a record year:

The Board looks to the current year with confidence in delivering record results in line with Adjusted Profit expectations....Bloomsbury’s portfolio of portfolios strategy, our authors, customers and the scale and resilience of our business continue to underpin the confidence we have in the future.

And helpfully, give us the consensus:

The Board considers consensus market expectation (before this publication) for the year ending 28 February 2027 to be revenue of £354.3m and Adjusted Profit of £49.9m.

There are reasons to think that the second half will be stronger for the consumer division:

Growth is second half weighted and the new novels for H2 2026/27 include many of our bestselling authors. In September, Gillian Anderson’s follow-up to Want, titled More, and Stephen Graham’s Letters to Our Sons, became instant Sunday Times bestsellers. Sarah J. Maas’ much anticipated next two novels in the A Court of Thorns and Roses (‘ACOTAR’) series, A Court of Splintered Harmony and A Court of Forgotten Melody, will be published on 27 October 2026 and 12 January 2027, respectively.

Forecasts:

I can't see any updated note from their broker, Singer. Still, taking the FY27 revenue forecast from earlier in the year, where Singer provides the split between Consumer and A&P revenue, then this is the implied H2:

While these don't look impossible, they need to be on for a near-best-ever H2 in the consumer division to hit forecasts.

More worryingly, to hit forecast PBT in my calculations, they would need to reach near-record 15% operating profit margins in H2 for Consumer, while also increasing H2 A&P margins back to around 20%, something that may prove challenging on declining revenue forecasts.

Balance sheet:

The better news is that the company is generating strong cash flow with net cash rising to £22.8m. Although this is down from the FY number, it is largely due to dividend payments. They will also get some cash from the Anthropic settlement, although teh exact figure is unknown.

The interim dividend increased by 5% year on year to 4.28p. However, the problem with being such a highly rated stock is that the actual yield is low, and net cash is only 4% of the market cap. This doesn't really move the needle on valuation.

Mark's view

While it seems too soon to say the company will miss expectations, they have left themselves needing a pretty big H2 to hit the numbers. They need sales to deliver in their consumer division, and they'll need near-record operating margins in both BUs to hit forecasts. It would be particularly embarrassing if they upgraded forecasts earlier in the year, only to miss them, even slightly.

Increasing teh risk is that FY28 is not currently forecast to benefit from such a strong pipeline of book releases, which means that profits are currently forecast to decline. Unless, there are upgrades to come, a 16x multiple for a company with flat EPS and sales on four years previously may look a bit punchy, despite some excellent quality metrics.

Despite these risks, the company has executed very well over the last few years. It would probably be foolish to bet against that continuing. However, with the risk of a profits warning for FY27, or at least no upgrade for FY28, rising given today's results, I don't think we can remain fully positive. AMBER/GREEN

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Camellia (LON:CAM)

Down 9% to 5250p - Trading Update - Mark - AMBER  ↓

Bad news from the now-mainly agricultural conglomerate: they say their "...trading result for 2026 is expected to be weaker than previously anticipated." The blame is put on:

The Group has seen stronger trading performances in the Bangladesh, India and Eastern Produce Kenya tea businesses and the Brazilian arable business is performing in line with expectations. This has been more than offset by weaker results from Kakuzi, as reflected in their announcement on the 22 October, and from Malawi and South Africa. JING has continued to make good progress towards achieving positive trading profits despite the downturn in its important Gulf States markets. Weaker North Sea activity is expected to result in disappointing trading results at AJT.

Today's announcement from separately listed (but very thinly traded) Kakuzi, in which Camellia has a 50.7% interest, gives some more background to this part of the underperformance:

Further to our profit warning announcement of 25th August 2026, in which we advised that earnings for the year may be at least 25% lower than the previous year, the Board in its latest review expects net earnings to be significantly below the previous year as a result of the continued downturn in the macadamia market and a lower macadamia crop.

Helpfully, they quantify the impact:

The current forecast is for a full-year trading loss of between £3-5 million, compared with a trading profit of £1.0 million in 2025. The final trading result for the full year will be influenced by the phasing and seasonality of agricultural production and sales in the fourth quarter.

This undoes the upgrade earlier this year, which saw profitability forecast for the first time in many years:

The long-term track record here is pretty woeful:

Such is the nature of agricultural production; it is highly variable and subject to many unpredictable factors, such as teh weather or commodity pricing for inputs and outputs.

Asset disposals:

The better news is that the company has done a good job rationalising its operations over the last few years under a new management team. It has a long history and built up holdings and subsidiaries in diverse areas such as engineering and insurance, which were much more valuable outside the current mish-mash of a corporate structure.

They also have property assets and "heritage assets", including manuscripts and documents of historical significance. Again, these are being sold over time and typically achieve far beyond their book value. Something they re-confirm today:

The Board currently forecasts profits of approximately £23 million from disposals of property, plant and equipment, and assets classified as held for sale, principally reflecting disposals of artwork and tea gardens undertaken during the year. The resulting EBITDA for the year is expected to be in the range of £25-28 million.

The impact of these sales can be seen on the growing cash balance, which now stands at £82m, despite £18.9m returned via tender offer in 2025.

When you include liquid assets such as treasuries and money market funds, the £133m figure covers the current market cap. Overall, the company trades at less than half TBV, despite signs that some assets are worth more than book, and half the assets are in cash or cash-like funds:

The problem is what the company intends to do with these assets. So far, the strategy has been to invest the cash in additional agricultural assets. Their track record of doing this has been poor (though under a previous CEO). Typical returns on agricultural assets are poor unless one takes more risk than average. In their annual report, they say:

Invest in agricultural businesses, primarily in emerging markets where our expertise enables us to generate a return commensurate with the risks taken and where local communities benefit from our business activities.

However, so far their existing agricultural assets have been more risk than return, as today's updated guidance shows. Do shareholders really want more of the same?

Mark's view

Graham gave the company the benefit of the doubt after its August profit warning, keeping the AMBER/GREEN view and citing the significant amount of liquid assets the company has.

If the company committed to returning, say, 80% of that cash to shareholders and investing it to improve the currently held loss-making assets, I would be tempted to keep the same rating. After all, a company trading pretty close to its cash balance and at half TBV is usually a value investor's dream. However, while the stated strategy is to reinvest that cash into more agricultural assets, and the existing ones keep underperforming, I'm not sure where the long-term returns will come from, and with the second warning in a row, AMBER seems more sensible.

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Record (LON:REC)

Up 7% to 46.5p - Q2 Trading Update - Mark - AMBER ↑

This seems to be a strong quarter for this currency hedging and investment specialist, with AUM up 7%:

Unlike the Q1 update, which credited Passive Hedging for growth, we don't get any guidance on the relative performance of the low-margin Passive and high-margin Dynamic hedging stratgies.

We may get more insight on this in November's interims. However, I expect no major deviation from recent trends, which show passive products increasing their share of what they call their Risk Management Pillar.

Almost all of the group’s $10.4bn inflows came from the new Absolute Return strategy, not hedging. That pillar’s AUM more than tripled in the quarter, and is starting to make a meaningful contribution to AUM.

Perhaps the most interesting development is the return of performance fees, after they didn't generate any in Q1:

At £2.2m, this is their best quarter in recent times, and is material for a company that has struggled to grow the bottom line recently, and is forecast to deliver just short of £10m PAT for the full year:

Ultimately, they say "Performance across the Group remains in line with expectations for the full year." Future performance fees, of course, depend on performance through the rest of the year. However, it gives some confidence that the current forecasts may be achievable.

Mark's view

Graham reduced our view on this company to AMBER/RED following a second profits warning in a row earlier this year. I am still wary that they aren't completely out of the woods. However, strong flows into their new Absolute Return Strategy, combined with a recent high in performance fees this quarter, suggest things are getting easier rather than harder.

At an 11x forward multiple and with a decent yield (even if it is forecast to be a bit lower this year), I think we can afford to be a bit more generous. AMBER

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Essentra (LON:ESNT)

Up 6% to 120p (£320m) - Q3 2026 Trading Update - Mark - AMBER =

These are decent revenue growth rates for Q3:

Essentra delivered strong Q3 revenue growth, supported by increased volumes and disciplined pricing. Revenue increased by 14.6% at constant currency on a working day adjusted basis, comprising like-for-like revenue growth of 10.8% and a 3.8% contribution from the acquisitions of Device Technologies and Boteco.

Acquisitions have played their part, but almost 11% LFL revenue growth remains strong in the current global macro environment. This has led to:

The Group's underlying performance continues to improve, and revenue growth for the full year is now expected to exceed previous guidance, reflecting increased volume growth and disciplined pricing actions, which are expected to recover elevated inflationary costs.

It seems cost-cutting and price increases are playing their part:

Execution of the Growth and Simplification programme, as outlined at Essentra's HY26 results in July, continues to sharpen the Group's commercial focus and is beginning to deliver results.

This may make this growth less sustainable than pure volume growth, although you sometimes get a lag effect where inflationary price increases lag costs and lead to gains once inflation subsides.

It hasn't all been plain sailing, as these pressures have led to some significant downgrades at the end of last year, and recent performance strength hasn't yet recovered from this:

The helpfully quantify the range of forecasts:

The Company-compiled range of market expectations for FY26 adjusted operating profit, as at 21 October 2026, is £32.3m to £34.3m.

But this is a tight range, so the shift from the middle to the upper end of forecasts is just a 3% upgrade. Assuming this feeds into a similar EPS rise, the FY26 consensus will still be 15% below where it was when the downgrades began last year. The share price is 20% higher than then, making it look about 30% more expensive.

Adding to the feeling that the rating may have got ahead of itself is a quick look at the half-year results, which show some fairly chunky adjustments required to hit the numbers:

None of these I personally consider exceptional, and it is perhaps easy to be trading at the upper end of expectations if you choose to exclude some key costs that appear to be ongoing.

Then the Half Year results reveal that the company has net debt:

Net debt of £70.7m excluding IFRS16 lease liabilities (30 June 2025 £68.7m), representing leverage of 1.6x adjusted EBITDA following the completion of the acquisition of Boteco

While 1.6x leverage isn't high enough to worry about solvency, it should make us adjust down the earnings multiple we are willing to pay. A TTM EV/EBITDA of 10 doesn't scream value in the current UK markets.

Mark's view

I think there is an argument to be made that earnings here are on a recovery trajectory, driven by cost-cutting and delays in passing on inflationary cost rises to customers. However, I struggle to get behind a 16x forward earnings multiple, even if earnings are forecast to grow in future years, when earnings are heavily adjusted, and there is reasonable net debt to factor into any valuation.

Roland called this AMBER after the H1 results in the summer, and the middling Stock Rank suggests I should stick with this view.

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Dr's Section

Arbuthnot Banking (LON:ARBB)

Up 6.5% to 855p (£131m) - Third Quarter 2026 Trading Update - James - GREEN

Arbuthnot Banking features in my portfolio, and when reviewing the StockReport data recently, I wondered whether it could soon be a Super Stock. Today’s third quarter trading update and the market’s reaction brought that a little closer.

Lending was the main driver for this private bank. Customer loans and leased assets rose 12% year on year to £2.5bn, and the specialist lending businesses grew 26%. Renaissance Asset Finance's book is up 45% to £409.5m – most of the growth coming from wealthy individuals buying high-value cars -- and Arbuthnot Commercial Asset Based Lending's is up 39% since December to £305.6m.

Deposits were up 10% to £4.9bn, although they barely moved in the quarter as the bank chose not to compete for rate-sensitive money. Funds under management and administration rose 21% to £3.1bn, and the long loss-making wealth arm turned a profit in the quarter.

There aren’t many weak points here. The quarter-on-quarter data isn’t as strong as the annual comparisons suggest: deposits and total loans each rose only about 2% in Q3, gross wealth inflows slowed to around £115m from roughly £170m a quarter in the first half, and Asset Alliance’s leasing book was broadly flat.

The Board now expects full-year profit before tax to come in ahead of expectations, and it says any rate rise would be a further tailwind.

Interest rates have traditionally mattered more to Arbuthnot and this is seemingly why the stock was punished more as interest rates fell through 2024 and 2025.

It holds £4.9bn of customer deposits but has lent out only £2.5bn. Much of the difference sits with the Bank of England or in short-dated gilts and Treasury bills, with returns linked to interest rates. Arbuthnot doesn’t hedge the earnings on £523m of this “free cash” (as at June), calling the cost prohibitive. When rates fall, the return on its Bank of England cash falls straight away, while the gilts and Treasury bills delay part of the hit by three to 12 months.

Last year shows the effect. The Bank of England cut four times in 2025, ending at 3.75%. Lower rates were a big part of why profit before tax fell from £35.1m to £24.2m, and the net interest margin narrowed from 5.1% to 4.7%. The drag continued into this year: the average base rate in H1 2026 was 3.75%, against 4.48% a year earlier, and pre-tax profit was flat at £11m even though the loan book grew.

Of course, higher rates don’t help every part of the group. The company expects growth at Renaissance Asset Finance to slow in Q4 as financing costs are expected to increase.

Capital and credit

Capital ratios have come down a little. The CET1 ratio was 12.0% at June, against 13.3% at December, as the growing loan book increases capital requirements. The total capital ratio of 13.9% is still well above the regulatory minimum of 8.05% before buffers, although rule changes are expected to add about £20m to Arbuthnot's capital requirements.

Credit quality looks steady. Impaired (Stage 3) loans fell from £64m to £60m over the first half, and the impairment charge was less than 0.2% of the loan book on an annualised basis. One thing to watch is Stage 2, loans where credit risk has risen significantly, which grew from £53m to £74m.

Metrics and rates

When I put an offer in on my house in late 2023, amid peak rates, Arbuthnot’s return on equity was 15.2%. Today’s StockReport shows a figure of 6.9%. The difference is largely interest rates, and that’s why I’ve been adding to my holding with the market pricing two rate hikes by the end of the year, and possibly more in 2027.

The Value Rank of 98 suggests this stock may be somewhat overlooked. Arbuthnot is valued at £131m, or 0.47 times book value (1,712p a share at June) and 0.53 times tangible book.

Consensus forecasts, from just two brokers, put the shares on 8.5 times 2026 earnings of 96.6p, falling to 6.6 times on 2027’s 123p. The forecast dividends of 57.5p and 61p give yields of 7.0% and 7.5%. Those forecasts haven’t yet been updated for today’s upgrade, so the multiples should come down further.

James’s take

It’s been a while since we last had a look at Arbuthnot, and the stock, for the most part, moved in the opposite direction to major UK high street banks. I definitely don’t see this as a risk-free opportunity, but I’m drawn by the valuation metrics, and the dividends. I’m also attracted because I feel Arbuthnot’s rate sensitivity looks like it might be a real tailwind over the next year.

There’s another very macro consideration, which I don’t know whether it’s worth factoring in (let me know in the comments). Arbuthnot is performing well despite record outflows of wealthy individuals, according to some sources. If that trend reverses, you’d expect Arbuthnot to be well positioned.

But on the valuation, rate forecast, and broad performance of the business, I’m shifting Arbuthnot to GREEN.