Smiths News — Positive update, transformation has begun

Smiths News (LSE: SNWS)

Last close As at 01/10/2026

GBP0.74

▲ −1.40 (−1.85%)

Market capitalisation

GBP184m

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Research: Industrials

Smiths News — Positive update, transformation has begun

Smiths News has issued a positive FY26 trading update stating that it expects to deliver FY26 results ahead of market expectations, driven by stronger-than-expected demand for collectables in H2, and that FY27 trading has started positively. We nudge our FY26 adjusted operating profit estimate up by 3%. The company confirmed that its transformational programme to establish a national distribution footprint has begun, with further guidance on the financial effects due with the FY26 results on 4 November against a context of a return on capital above the company’s hurdle rate. Our 96p DCF valuation implies over 40% upside.

Written by

Jonathan Day

Director of Content, Industrials

Industrial support services

FY26 trading update

2 October 2026

Price 67.60p
Market cap £167m

Net cash as at 28 February 2026

£7.8m

Shares in issue

247.7m
Code SNWS
Primary exchange LSE
Secondary exchange N/A
Price Performance
% 1m 3m 12m
Abs (2.9) (3.7) 25.4
52-week high/low 76.0p 50.0p

Business description

Smiths News is the UK’s largest newspaper and magazine distributor with a c 55% market share covering over 22,000 outlets 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.

Next events

FY26 results

4 November 2026

Analyst

Jonathan Day
+44 (0)20 3077 5700

Smiths News is a research client of Edison Investment Research Limited

Note: PBT is equivalent to adjusted operating profit, EPS are on a company reported, adjusted basis. The company paid a bonus dividend of 3p in FY25.

Year end Revenue (£m) PBT (£m) EPS (p) DPS (p) P/E (x) Yield (%)
8/25 1,064.0 39.1 11.14 8.55 6.1 12.6
8/26e 1,033.1 38.2 11.19 5.25 6.0 7.8
8/27e 1,000.1 35.1 10.35 5.25 6.5 7.8

H226 above expectations, driven by collectables

Smiths News’s 29 September post-year-end trading update for FY26 stated that H226 saw stronger-than-expected demand for collectables, resulting in a record contribution from the Men’s FIFA World Cup of more than £3m, bolstering the overall performance of the news and magazines business in the period. The timing of international football competitions, such as the FIFA World Cup or UEFA European Championship, typically enhances the group’s performance in alternate years. Consequently, the company expects to deliver FY26 results that are ahead of market expectations. We nudge our FY26 adjusted operating profit estimate up by c 3% (Exhibit 1). Management points to a positive start to trading in FY27.

Transformation programme has begun

Smiths News announced transformational contract wins for national distribution (Exhibit 2) in mid-July, late June and mid-June and has stated that its programme to establish a national distribution footprint to service the new contract wins, ahead of the first go-live in July 2027, has begun. While this will involve investment, management has stated that the company expects to make a return on capital above the company’s hurdle rate, to deliver the network expansion within existing resources, and has confirmed ordinary dividend guidance at or above 5.2p for FY26 and FY27. Smiths News reiterated that further guidance on the financial effects of the programme is expected to accompany the FY26 results on 4 November 2026. We continue to believe that this investment reflects sensible capital allocation given the revenue boost and the scope for the national footprint to benefit from opportunities with existing operations, as discussed in our May 2026 note.

3% upgrade to FY26, 96p/share DCF unchanged

The incremental revenue boost from collectables drives a 3% upgrade to our FY26e adjusted operating profit. Our FY27 adjusted operating profit estimate falls by c 2% to £35.1m (from £35.9m), reflecting a revenue decline inside the usual 3–5% range and slightly elevated fuel costs. Our 96p/share DCF valuation is unchanged. Risks include execution and the potential impact of TGJones store closures.

Changes to estimates

We make minor changes to our FY26 and FY27 estimates following the trading update. The better-than-expected contribution from the Men’s FIFA World Cup within collectables in FY26 of £3m is roughly £1m above our embedded expectations and this drops through to adjusted operating profit in FY26. We nudge our FY27 numbers down slightly to maintain a revenue decline inside the usual 3–5% range and slightly higher distribution expenses given elevated fuel costs combined with frozen charges. We now see FY27 adjusted operating profit of £35.1m (previously £35.9m).

96p DCF valuation unchanged

The minor changes to our forecasts result in no change to our DCF valuation, which remains at 96p/share.

National contract wins



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