Folded newspapers

Smiths News

LN: SNWS

Market Cap£96m

Last Close 38.75p

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 has successfully performed a turnaround of the business that has seen it return to a core newspaper and magazine distribution operation. While the print sector is declining, revenue is predictable and management has a clearly demonstrable cost-saving track record such that cash flow is strong and profits are broadly flat, post COVID-19. This means that debt is being paid down and dividends are likely to become an increasing feature. We value the business at 81.5p, twice the current 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 3.8 2.3
2021A 1109.6 48.4 35.4 12.21 3.2 2.0
2022E 1065.2 41.1 30.1 9.88 3.9 2.3
2023E 1022.6 41.9 32.3 10.24 3.8 2.3
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 21/01/2022
Content on Smiths News
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 | Update | 8 November 2021
Stack of newspapers
Smiths News – Predictable cash flows and growing dividends
Industrials | Initiation | 18 October 2021
Stack of newspapers
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Share price graph
Balance sheet
Forecast net debt (£m) 53.2
Forecast gearing ratio (%) 92
Price performance
%
1m
3m
12m
Actual 9.9 0.9 37.9
Relative* 8.0 (1.8) 24.3
52-week high/low 45.4p/26.0p
*% relative to local index
Key management
David Blackwood Chairman
Jonathan Bunting CEO
Paul Baker CFO