Associated equity: Smiths News
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.
Smiths News — 3 videos in collection
Smiths News’ share price has increased by 48% in the last six months, yet the stock is trading on an undemanding FY24e P/E of c 5x. With its highly cash-generative characteristics and consistently strong balance sheet, the company shows a positive outlook despite declining markets. In this interview, Jon Bunting, CEO of Smiths News, highlights the company’s recent contract renewals and the potential for further long-term contracts to be signed with newspaper and magazine publishers. He discusses the development of ancillary revenue in addition to the company’s five initiatives to achieve low risk, low capital expansion. Jon touches on how the company has been able to mitigate the well-publicised macroeconomic headwinds of the past 12 months, such as inflation in both energy and wages. He concludes by discussing the dividend yield on Smiths News shares, which at a share price of c 50p offers an attractive 8.4% yield. Given that the business has generated EPS of over 10p/share consecutively in the last two years and has a DPS of 4.2p, this implies a healthy dividend cover.
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