Smith & Nephew Share Discussion Threads

[lonrho] 12/10/2023 15:36

2010 seems to be the peak year with a trading profit of 969k and a margin of 24.4% compared to 2022 with 901k trading profit and a margin of 17.2%. Rupert Soames did a good job of sorting out Serco so hopefully he can make a difference now he is chairman here. By mid 2014 share price was £11 despite profits reducing from 2010 onwards.

[essentialinvestor] 12/10/2023 14:58

Laurence, part of the issue is arguably their main competitors growing stronger
v SN over the last decade. This may account for some of SN's weaker metrics.

While a bid can't be ruled out, it has been mentioned as a takeover candidate for decades.

If you go back 10 years, this was a high margin business with low gearing and
a prodigious cash generator. Those bullish on SN may say that's now reflected in
the current share price, however circa 2013, at approx £8 plus a share you were
buying at the time a great business.

[laurence llewelyn binliner] 12/10/2023 09:35

#Essential Investor - thanks, historic margin loss is why the company is on a 10 year low, I am looking for reasons why it may have bottomed out and offer growth going forward up from the 15.3% margin from H1, in an attempt to establish if this is a reasonable entry point...

2023 FY outlook - increased full year underlying revenue growth guidance of 6.0% to 7.0% (previously 5.0% to 6.0%), unchanged trading profit margin guidance, expected to be at least 17.5%..

Debt interest will be close to peaking out soon and could subside from 2024 impacting all indebted companies..

[essentialinvestor] 12/10/2023 09:01

How are margins stable?, trading profit margin registered a hefty fall at the H1 to
15.3%.

For years SN had trading profit margins in excess of 20%, for a few years around 24/25%.

Margins began a multi year decline around 2015/16 (from memory)
and despite multiple CEO's since, each with a new refreshed strategy
to improve business performance, results have arguably been sadly lacking.


Margin compression leading to reduced free cash flow is central to the bearish case on SN.

[laurence llewelyn binliner] 12/10/2023 08:00

A lot more research to do yet, but revenues are +, margins stable, the 12 step recovery program on track, but debt was up USD350M in H1 and the CFO is off summer 2024..

[justiceforthemany] 11/10/2023 21:02

Seems to be following Stryker down which was off 5% today. I can tell you the weight loss drugs driven sell off is absolute nonsense. If you are in the medical profession you will understand why.

[justiceforthemany] 11/10/2023 20:43

Citadel to blame here.
Ludicrous valuation.
Debt is NOT an issue.

[pugugly] 11/10/2023 19:22

LLB Most useful post - Had been considering but given you clarification on debt will lower gamble target.

[laurence llewelyn binliner] 11/10/2023 19:13

New potential investor here looking in at opportunity..

No more dividends until May 2024 and sitting at a 10 year low SP, is there much to prop this share up and drive a turnaround growth story..?

Or is it all down to the debt pile hurting much like everything else in the red..?

03.08.2023 - The net interest charge within reported results was USD44M, with the change due to an increase in net debt year on year and an increase in the overall weighted average interest rate given the prevailing higher rate environment. The groups net debt excluding lease liabilities, increased from USD2.3BN at 31 December 2022 to USD2.65BN at 1 July 2023 with committed facilities of USD3.7BN
We expect to finish 2023 with leverage of 2.0x, unchanged year-on-year.

2023 FY outlook - increased full year underlying revenue growth guidance of 6.0% to 7.0% (previously 5.0% to 6.0%) unchanged trading profit margin guidance, expected to be at least 17.5%

[essentialinvestor] 11/10/2023 15:15

Stryker do not need SN, while you can't rule a bid out I would be surprised to see one from Stryker.

[suetballs] 11/10/2023 15:07

Yep - not looking good.
Suet

[edwardt] 11/10/2023 14:43

at these levels they need to be swallowed up by stryker.

[justiceforthemany] 05/10/2023 15:24

Yes it is but even on an up day this is down.
Deepak Nath must go!
Be sacked or resign. Awful CEO.

[pugugly] 05/10/2023 08:27

Ex Dividend today - 11.915p

[justiceforthemany] 04/10/2023 15:24

So many FTSE stocks trading at decade lows. Are things really that bad? Elections loom and if a recession is truly here then rates will simply HAVE to be cut.

[justiceforthemany] 28/9/2023 15:12

Company seems to be acutely aware of that EI. New Chairman in Soames, recent board/director shake up also. Deepak needs a good hard slap. Would not take much to get this company growing again now that lockdowns are behind us. 100% upside just to get back to pre Covid highs.

[justiceforthemany] 28/9/2023 14:51

Stryker up 3%

[essentialinvestor] 28/9/2023 13:39

With respect this is company specific, nothing to do with some new drug.

[justiceforthemany] 28/9/2023 13:38

Is the company worth HALF what it was pre pandemic?
Of course not.
Surprised no one has snapped this up. Bargain. Weak pound to boot.

[justiceforthemany] 28/9/2023 13:37

That is completely overblown - obesity is a growing problem and these are no miracle cures for this issue - and this company is very well diversified not just relying on joint replacements. Ridiculous.

[smcni1968] 27/9/2023 21:08

The concern seems to be obesity drugs leading to fewer fatties needed knee and hip replacements

[essentialinvestor] 27/9/2023 21:01

Margin compression is what analysts are fretting about, frequent CEO changes,
each with a new plan to improve efficiency and drive growth.

[pugugly] 27/9/2023 20:00

Too many of those needing our product - in particular hips in the UK - having operations delayed - once twice or more times by the medics who have abandoned the Hippocratic Oath and are holding the NHS to ransom and condemning too many of the mainly elderly to ongoing pain which could be relieved by surgery.

Results - Significant number of possible beneficiaries pass over in pain before they can receive an operation so no longer potential beneficiaries - fall in usage reduces S&N revenue and cash flow = fall in share price - takeover potential and yet another British company crosses the ocean reducing GB plc's revenue and tax base.

Not yet low enough (imo) to attract a bid - Could easily need to drop another 10%+ or so.;

[justiceforthemany] 27/9/2023 17:21

Stryker down in the US that is why.
Ridiculous valuation in a defensive, absolute necessity healthcare sector that the Chairman Soames Churchill's Grandson will hopefully deliver growth as he did with Serco and turn this dog around.
Was trading at DOUBLE this valuation pre-Covid!