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Smiths News

LN: SNWS

Market Cap£84m

Last Close 33.75p

Smiths News is the UK’s largest newspaper and magazine distributor with a c 55% market share covering 24,000 retailers in England and Wales. It has a range of long-term exclusive distribution contracts with major publishers, supplying a mix of supermarkets and independent retailers.

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Investment summary

Smiths News management again delivered on its promises and produced a strong set of interim results, with PBT up 6.3% and EPS up 10.9%. The interim dividend was nearly tripled due to a combination of already announced loosened banking arrangements and considerably lower debt levels. This implies a full-year dividend of 4.2p, which could offer investors a yield of c 13%. Underlying market conditions continue to normalise and with the one-off proceeds now received, we have increased our valuation from 81.5p to 92p a share, nearly three times the current share price.

Y/E Aug
Revenue (£m)
EBITDA (£m)
PBT (£m)
EPS (fd) (p)
P/E (x)
P/CF (x)
2020A 1164.5 40.4 28.2 10.28 3.3 2.0
2021A 1109.6 44.9 31.9 10.83 3.1 1.8
2022E 1076.3 41.9 30.3 10.25 3.3 1.9
2023E 1044.0 40.7 30.5 9.77 3.5 2.0
Industry outlook

Volumes of newspaper and magazine sales have been falling at an average rate of c 5% pa for many years as first TV and radio and then online have taken over as the primary source of news consumptions by an increasingly younger audience. Cover price inflation has partially offset lost revenue, but Smiths News has had to, and continues to, cut costs repeatedly to make up the short-fall. These characteristics are likely to persist into the future.

Last updated on 30/06/2022
Content on Smiths News
Smiths News – Stronger balance sheet leads to big dividend hike
Industrials | research Update | 31 May 2022
Stack of newspapers
Smiths News – ETV: Cash flow begins to open up future options
Industrials | Edison TV | 18 November 2021
Smiths News – Strong results, debt falling rapidly
Industrials | research Update | 8 November 2021
Stack of newspapers
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Share price graph
Balance sheet
Forecast net debt (£m) 21.4
Forecast gearing ratio (%) 69
Price performance
%
1m
3m
12m
Actual (2.6) (1.5) (24.4)
Relative* 3.9 4.7 (23)
52-week high/low 45.4p/31.6p
*% relative to local index
Key management
David Blackwood Chairman
Jonathan Bunting CEO
Paul Baker CFO
George Cooper Head of corporate and finance