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Smiths News (LSE: SNWS)

Last close As at 09/09/2024

GBP0.57

▲ 0.20 (0.35%)

Market capitalisation

GBP143m

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.

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 consumption 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 shortfall. These characteristics are likely to persist into the future, but Smiths is developing new revenue streams to offset these pressures.

Latest Insights

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Industrials | Update

Smiths News — Refinancing releases dividend shackles

Industrials | Flash note

Smiths News — On track to meet guidance

Industrials | Update

Smiths News — Expansion initiatives begin to blossom

Industrials | Flash note

Smiths News — Resilient performance despite headwinds
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Sector

Industrials

Equity Analyst

Andy Murphy

Andy Murphy

Director, Financials & Industrials

Key Management

  • David Blackwood

    Chairman

  • George Cooper

    Head of corporate and finance

  • Jonathan Bunting

    CEO

  • Paul Baker

    CFO

Balance Sheet

Forecast net debt (£m)

12.1

Forecast gearing ratio (%)

170

Share Price Performance

Price Performance
% 1M 3M 12M
Actual (2.7) (5.9) 37.0
Relative (4.4) (4.8) 24.2
52 week high/low 65.6p/40.7p

Financials

Smiths News’ H124 results highlighted the robustness of the underlying business, but also revealed the success that management is achieving in creating long-term shareholder value. For example, 74% of revenue is now contracted until 2029, the recent refinancing saves costs and removes the dividend restriction, and the organic growth initiatives are gaining significant momentum. Furthermore, the revised capital allocation policy raises the possibility that modest, self-funded M&A could add further scope to the growth initiatives. Our valuation is 90p/share.

Y/E Aug Revenue (£m) EBITDA (£m) PBT (£m) EPS (fd) (p) P/E (x) P/CF (x)
2022A 1089.3 42.9 32.3 11.03 5.2 3.2
2023A 1091.9 42.7 33.4 10.68 5.4 3.2
2024E 1070.1 42.1 33.4 10.01 5.7 3.3
2025E 1038.0 41.8 35.0 10.62 5.4 3.3