The Week Ahead (8 – 12 Dec): US Interest Rates, Costco, Adobe, Moonpig, RWS

Markets

The FTSE100 is largely flat this week as lower financials were a drag, despite support from commodity producers. U.S. indices fell earlier in the week as the market priced in higher global risks. However, it rebounded midweek as US rate-cut expectations increased.

Here's what we can look forward to next week:

Economic Calendar

US Interest Rates

The US Federal Funds Rate is forecast to be cut by a further 25bps to 3.75% on Wednesday:

[All charts in this section: Trading Economics]

However, due to the recent government shutdown, the October 2025 CPI report was cancelled, and CPI data for November is scheduled for 18^th December. This means up-to-date inflation data will not be available to base this decision on, and the Fed will instead have to rely on other indicators, such as jobs data released over the last week. The uncertainty means there is a wider scope than usual for a surprise decision, and markets may react more strongly to any shock.

UK Figures

It is a fairly quiet week for UK economic data. However, with the recent Budget adding to the economic uncertainty for many companies and individuals, a few data points may indicate how this is being perceived and reflected in economic activity.

The RICS house price balance, released on Thursday, is a survey-based indicator from the Royal Institution of Chartered Surveyors that shows whether more surveyors reported a rise or a fall in house prices in their area. It is considered a leading indicator for house prices because it includes forward-looking sentiment on price and sales volume expectations for both the near-term and the coming 12 months. Recent trends here have not been particularly promising:

Retail Sales data has been more variable, but with the same underlying trend:

Finally, UK Industrial Production saw a big dip in September. However, it is forecast to return to growth in December:

All of these leading indicators may give advance warning as to whether the UK has been naughty or nice when GDP figures are released just before Christmas!

Companies Reporting

It is forecast to be a relatively quiet week for planned news, with just a few quarterly reports in the US and a few companies reporting Final/Interim Results to 30^th September.

If any investors think I've missed some upcoming news or included a red herring, then feel free to correct this in the comments.

Costco Wholesale (NSQ:COST)

Costco is considered an exceptional business. Its ability to deliver retail at scale and keep its margins constant means that it largely earns its money from the subscription fees. This subscription model means it has consistently high returns on capital, and it is one of the highest Quality-Ranked stocks in the database:

However, it is not cheap:

Revenue growth comes in at 10% CAGR over the last 5 years:

And a little bit of operational gearing leads to a 12% 5-yr EPS CAGR:

Looking forward, analysts are predicting similar growth figures going forward, meaning its PEG ratio is unimpressive at over 4:

It has beaten forecasts over the last year, but only very slightly:

[Source:NASDAQ]

Investors have started to baulk at this valuation, and the shares have started to decline. The three-year chart looks very much like a “hump”, which implies negative Momentum characteristics:

Management will need to show accelerating growth beyond current forecasts to reverse this trend.

Adobe (NSQ:ADBE)

When I reviewed this US software provider in the run-up to its Q3 earnings release, I said:

When the company reports Q3 earnings on Thursday, any further beat will make the company look exceptional value. Especially to investors, like myself, who think that AI productivity gains are equally likely to accrue to companies adapting existing strong products and extensive customer relationships, as to new start-ups.

Earnings did indeed come in ahead of consensus:

[Source:NASDAQ]

However, this didn’t stop the share price decline:

Comparing Adobe with Costco shows how much narrative drives stock market valuation. Both are very high-quality subscription model businesses, with Adobe only very slightly behind on the Quality Rank:

Adobe tends to earn higher Returns on Capital:

And its 5-yr revenue CAGR is higher at 14%:

Again, it has modest operational gearing leading to a 5-yr EPS 17% CAGR:

There’s no dividend, and part of this EPS growth is due to a 2% CAGR reduction in shares in issue, but even accounting for this, the EPS growth rates are higher:

Looking forward, 2-yr EPS CAGR is forecasted to be even higher at Adobe, yet the shares trade at a material discount to Costco and other software peers:

It seems market participants who fear the impact of AI on businesses such as this won’t hold at any price, even if there is no sign of that disruption in the current forecasts. This may provide an opportunity for investors willing to take the other side of that trade.

Moonpig (LON:MOON)

In the UK, Moonpig is showing signs of a bowl-shaped share price recovery (although that seems to have flattened off more recently):

Like many businesses, it seems to have been floated on an optimistic multiple, and the hangover of that has taken time to work through. More recently, trends are exactly what investors like to see, with mostly continuous upgrades in EPS for both forward years:

This looks good in a historical context, too:

It isn’t particularly cheap for a UK stock, and especially a retailer:

However, a 16% 2-yr forecast EPS CAGR makes it look reasonable value on its PEG ratio if that outcome is achieved. However, the recent trading statement was less impressive for FY26, guiding:

For FY26, we continue to expect Group Adjusted EBITDA to grow at a mid-single digit percentage rate and growth in Adjusted earnings per share at between 8% and 12%. Strong free cash flow generation is expected to fund both ongoing investment in our growth strategy and returns to shareholders, comprising dividends and our FY26 share repurchase programmes of up to £60m. Our medium-term targets remain unchanged.

That is a relatively large range for adj. EPS growth and investors will be wanting to see signs that they can deliver in the upper end of that when the interim results are released next week.

The forecast growth is partly due to an increased take-up of attached gifts from partnerships with major brands. Again, from the recent trading statement:

Average order value is rising at Moonpig and Greetz, reflecting uptake of Moonpig Guaranteed Delivery and gift attach rate growth consistent with H2 FY25. Following on from the successful launch of Hotel Chocolat and the Entertainer in FY25, we expect upcoming trusted brand launches in flowers and gifting - including Laura Ashley Flowers, Next Flowers and JoJo Maman Bébé - to support continued attach rate growth during the key Christmas, Valentine's Day and Mother's Day trading periods.

This is one area where being the market leader helps, as brands are much more likely to want to access the current large customer base of Moonpig. However, with Card Factory having bought Funky Pigeon from WH Smith, they may be facing increased competition from a retailer that also has a significant market share, although this time in physical retail. It will be interesting to see if they comment on the competitive landscape in next week’s results.

RWS Holdings (LON:RWS)

RWS is another stock suffering from negative AI sentiment. The broker consensus has certainly not been kind recently:

However, it is hard to judge if that is due to AI disruption or simply because, in a poor economic climate, businesses are spending less on marketing and R&D, things that typically require high-quality translation. Whichever it is, this has been reflected in the recent share price:

Headline numbers released next week shouldn’t be a surprise. The trading Statement at the end of October said:

The Group expects to deliver adjusted PBT² of c.£60m reflecting a significant improvement from H1 (£18.0m) to H2, as the Group executed the efficiency plan that we announced in June...The Group had net debt⁴ of c.£26m at the end of September 2025 (31 March 2025: £27m net debt).

Adjusted PBT was at the bottom of the previous guidance range, and this news caused the shares to sell off by around 25%. This seemed a little harsh given the current very modest rating:

And, indeed, the shares have recovered somewhat since. There are three things I will be looking out for. Firstly, what are the adjustments, and how do these impact cash flow? We already know that recent trading has pushed the company, which is normally highly cash-generative, into a modest net debt position.

Secondly, they promised us an update on their medium outlook with these results:

The implementation of the new strategy we introduced in June 2025 is on track. A major step was the launch of our new organisational structure on 1 October. This structure streamlines how we sell, integrates our product and technology teams and organises our business into three segments: Generate, Transform and Protect. We intend to provide medium-term financial guidance and new performance targets when we release our FY25 results.

Finally, this has a phenomenal record of paying an increasing dividend. This, combined with the share price fall, means it is currently forecast to pay a 16% dividend yield.

Brokers' forecasts are for a very slight increase in the payout for the full year. If the final dividend declared next week reflects this expectation, then we can expect the share price to respond positively, whatever the rest of the results reveal.

[Disclosure: Mark holds shares in RWS Holdings (LON:RWS) ]