It's been a busy six months for Woolworths Limited (ASX: WOW) as it exits the home improvements business through the closure of Masters and sale of Home Timber and Hardware. The company also recently agreed to sell its petrol business to BP. These moves come as Woolworths attempts to strengthen the balance sheet and reinvest in its core businesses after a few tough years for the retail giant.
The company reported solidly in its FY2017 first quarter sales results and investors appear more optimistic than in recent years, pushing the share price up more than 10% over the last 12 months.
This comes despite growing competition in the supermarket sector from Aldi and a reinvigorated Metcash Limited (ASX: MTS). Wesfarmers Ltd (ASX: WES), which operates Woolworths' main supermarket competitor Coles, recently reported food and liquor sales were flat year-on-year from its FY2017 half year report. It will be interesting to see if Woolies can keep up its positive momentum when it reports tomorrow.
It's also been an eventful period for telecommunications provider Vocus Group Ltd (ASX:VOC), as investors have watched the company's share price fall close to 50% since August 2016. Following close to a decade of strong growth and mergers and acquisitions, the market appears bearish on Vocus' recent purchases and the group's ability to increase profitability.
Around the same time of the Nextgen Networks acquisition in 2016, Vocus announced the resignations of its chief financial officer and two directors. This has prompted questions regarding board cohesion following the merger with M2 Group early last year.
There are additional concerns in the sector that profit margins will decrease due to NBN-associated costs and increasing competition. Last week Australia's largest telco, Telstra Corporation Ltd (ASX: TLS), reported declining revenue and profits in its FY2017 half year report to send its share price down 6% since. Telstra's performance was below analyst consensus and could spell trouble for others in the industry. Having said that, the Vocus share price is up over 6% today, ahead of its interim results announcement tomorrow…
Whilst there hasn't been anywhere near as much drama for private hospital and pathology operator Healthscope Ltd (ASX: HSO), I'm still interested to see how it reports as well.
Healthscope's share price is down almost 25% in the last six months, largely due to the company's October 2016 update when it announced it had "experienced slower than expected revenue growth in hospitals" and that earnings growth for its hospitals was likely to be flat year-on-year.
Healthscope isn't high up on my watch list, but I like the healthcare sector as an investment idea and believe it will prove to be a highly profitable one over the long term. A disappointing set of numbers from Healthscope tomorrow could present buying opportunities elsewhere in the industry.
