Smiths News Share Discussion Threads

[davidosh] 23/10/2012 16:31

Nobody interested in the presentation ?

[cestnous] 23/10/2012 16:15

This stock only seems to know how to go up, Brilliant.

[davidosh] 19/10/2012 11:52

I have set up a meeting and results presentation with Smiths News directors for 4pm on Monday 5th November if any of you would like to join me again. The share price has nearly doubled in the 10 months since my last meeting with them so certainly cannot complain at their strategy bearing fruit so far

[edmundshaw] 19/10/2012 11:19

Diluted underlying EPS is a key number for me. Assuming I accept all exceptionals as, well, exceptional, and the dilutions as likely.

The dilutions are for employee incentive schemes (4.3m dilutive shares) and 1.5m shares relating to the acquisition of The Consortium which will be issuable in January 2014 on the achievement of financial performance targets and on continued employment to or around 30 September 2013. Given the share price performance, I accept all dilutions as likely.

Non-reccurring items are listed and look OK:
Integration costs
Network reorganisation costs
Amortisation of acquired intangibles
Acquisition costs
Property provisions
Gain on sale of investment

I therefore accept the diluted underlying EPS number of 19.3p. On that basis I see 142p as still very cheap. Given the projections for growth and efficiency saving/synergies, I see risk to the upside for earnings and dividend.

On that basis, I shall stay in barring a considerable rerating.

[lord gnome] 19/10/2012 08:12

Yes, on the basis of the IC figures we should be looking at a price of around £2.00 sometime during the next 12 months. Which is nice.

[gswredland] 19/10/2012 08:08

Thanks for that Cest
I think this is more than an income play

[cestnous] 19/10/2012 07:46

Full comment;

TIP UPDATE
Smiths News PLC (uk:NWS)
VALUE
MEDIUM RISK
Buy
Our previous tip
WE SAIDBuy
WHEN5 January 2012
PRICE78p
TIP PERFORMANCE TO DATE80%
An excellent set of full-year results that beat analysts estimate and led to earnings upgrades further vindicated our decision to pick Smiths News (NWS) as our Income Tip of the Year.
Any fears over the decline in newspapers and magazines on the business were dispelled as chief executive Mark Cashmore told that by 2016 less than half of the pre-tax profits will come from these core areas. After signing a £200m contract with News International which runs to 2019, and factoring in additional cost savings, Oriel Securities thinks that all but guarantees £40m of operating profit from the News business for the next four years. On this basis, this implies a target of group operating profits of £80m by 2016, up from £51m in last year.
In the latest 12-month period, underlying operating profits rose by £1m to £39m in the News business despite a 1.9 per cent decline in revenue. Mr Cashmore said that having delivered £25m in cost savings, he is now targeting an additional £15m over the next three years. But this is not all about cutting costs as Bertram's books has been galvanised by the addition of the Dawson business which offers a wider customer base and additional opportunities for growth. Gross margins and underlying sales both rose at eye catching rates there.
Oriel upgraded forecasts by 3 per cent and expects current year adjusted pre-tax profits of £52.5m and EPS of 21.2p, up from £47.5m and 19.9p, last year.
SMITHS NEWS (NWS)
ORD PRICE: 140p MARKET VALUE: £257m
TOUCH: 140-141p 12-MONTH HIGH: 144p LOW: 75p
DIVIDEND YIELD: 6.1% PE RATIO: 9
NET ASSET VALUE: * NET DEBT: £100m
Year to 31 Aug Turnover (£bn) Pre-tax profit (£m) Earnings per share (p) Dividend per share (p)
2008 1.24 32.6 14.8 6.7
2009 1.33 18.4 9.9 6.8
2010 1.83 28.1 11.7 7.4
2011 1.73 32.1 12.1 8.0
2012 1.80 36.6 15.2 8.6
% change +4 +14 +26 +8
Ex-div: 9 Jan
Payment: 8 Feb
*Negative shareholders funds
TIP UPDATE:
Smiths News chunky dividend is covered a healthy 2.3 times by earnings and, even after rising 80 per cent on our January buy tip, the forward PE ratio is still only 6.5. Income buy.
Last IC view: Buy, 115p, 17 August 2012

[edmundshaw] 16/10/2012 20:01

I.C. comment - the free bit:

When we picked Smiths News as our Income Tip of the Year one of the things we liked was the group's assured revenues thanks to its long-term contracts. That visibility has just got even better after the newspaper and magazine distributor agreed a five-year extension to its contract with News International, securing the distribution for The Times, The Sunday Times and The Sun until July 2019.

(More details you need to be a subscriber to see.)

[retsius] 16/10/2012 16:38

8.25p rise on adfvn.IC buy. Great day.

[deucetoace] 16/10/2012 16:36

Really nice rise here. I wonder what is fair value? Distributors have never had a high rating but this one is growing nicely albeit that the debt is beggining to get a little higher than ideal. Not adding more at this level but quite happy to hold for a little longer. It looks to me that a reasonable target for eps for this year is around 22-23p what do others think?

[gswredland] 16/10/2012 15:30

Snap edmund. This looks really good and i bought some more this morning on the dip. Fingers crossed!

[edmundshaw] 16/10/2012 15:24

When it dipped back under 136p this morning I could not believe my eyes. But my broker obviously suffering from the same mirage so I topped up at that price, even though I am already fully into this one.

Sometimes the gut instinct is stronger than the brain's portfolio theory controls can handle... :-)

Not often felt as comfortable owning a share as I feel here.

[beaufort1] 16/10/2012 13:59

Cracking chart, Gromit!

[skinny] 16/10/2012 08:42

I never got around to buying back!

[fenners66] 16/10/2012 08:38

Beating market estimates - always great to see.
Got some around 77p last year, and was all poised to buy more when they dipped back to about 91p but they rose that morning so I didn't. Since then onwards and upwards so of course I regret the missed opportunity but so happy to see them strengthening across the board.

[edmundshaw] 16/10/2012 08:14

This is me, David, I noted that too. My medium term target of 150p-180p is blown out of the water. Superb results.

Even on a yield of 5% (where prospective must be at least 5.4%) these should be over 170p. But with growth & efficiencies to come, and underlying diluted eps already at 19.3p, even 200p seems miserly to me now.

[davidosh] 16/10/2012 08:08

Absolutely fab results and confident outlook. Great additional cost savings to come and forecast inreases in profits from these higher than forecast results will create upgrades to earnings foRecasts from the analysts today. Dividend up 8% ...what is there not to like?

[this_is_me] 16/10/2012 08:07

This bit implies more than doubling of profit by 2016, taking into account the forecast £20 million in cost savings in news:


Our medium term outlook remains positive and we have a clear strategic vision to grow market share and increase profitability. Our diversification strategy is well underway and we are now targeting for 50% of Group profits to be generated from activities outside of newspaper and magazine wholesaling by 2016.

[cestnous] 16/10/2012 07:52

Brilliant!

[retsius] 16/10/2012 07:33

LG
Nice to see a fellow investor up and about at this time.

[lord gnome] 16/10/2012 07:23

Superb set of results. Nice divi increase. The market should like this. Your 180p target price looks nailed on This is me. Lots to go for here. The only slight negative is the increase in borrowing from the acquisitions, but that was to be expected and the free cash flow is so strong that it won't be a bother. Very happy to hold these.

[retsius] 16/10/2012 07:22

Very good results.Onwards and upwards.

[retsius] 15/10/2012 11:29

Hoping for good market reaction to results tomorrow.

[this_is_me] 11/10/2012 20:58

A share price of 180p would give a P/E for the current year of around 9 and a yield of over 5% for the current year. That is not expensive for reliable earnings with a growth element.

[retsius] 11/10/2012 13:53

Good results from wh smith. Unfortunately marred by the departure of their excellent ceo. This has dampend sentiment somewhat.