I admit I am very boring when talking about everything including shares. It is amazing that my wife is still with me. Back in April, I observed about FTSE 100 name DS Smith (SMDS) I ‘typically loving-up its exposure to e-commerce delivery box-making…along with a capability for sustainable packaging solutions, paper products and recycling services worldwide’. The share has historically worked really well for me - especially over the last nine months - but I do admit it has made little further progress since my last write up a couple of months ago. So should I still be excited or start to consider alternative options after publication of its full year numbers to the end of April?
It certainly is nice to read that it is ‘building momentum, good start to the new financial year’. The reality is, however, that the year to the end of April had its challenges for the ‘British multinational packaging business’. Whilst full year sales were only down 1% on a constant currency basis, adjusted operating profit was down 24% year-on-year, profit before tax was down a little more and return on sales fell by 2.6 percentage points to 8.4%. Not exactly that hot, but as it noted ‘it has hardly been an ordinary last year’. It certainly also was a ‘year of two halves’. And at least free cash flow progress was good at £486 million, up 37% year-on-year. That is not too shabby for a company with an EV of around £7.6 billion and hence allowing the dividend per share to return to 12.1p, equal to almost a 3% yield and covered twice by underlying profits. Generally the net debt to ebitda multiple of x2.2 is no disaster and I would expect more progress in the year to April next year.
We can certainly talk about its global profile and if you are an e-commerce and/or ESG lover then I suggest you should check out my prior article. As it noted, ‘Covid has increased these trends’. I would agree and frankly it is no surprise that it has seen post-lockdowns, this has not really stopped growing. I know talking about being Europe’s ‘e-commerce supplier of choice’ will not strike many people as a negative, but I personally like its interaction capability. It correctly notes in this space that many customers have worked out that ‘it is easy to trade with us’, because if not then a box-maker alone per se will ultimately run into a few problems. DS Smith is not the only one doing all of this around the world but, unsurprisingly, I heard rumours a few months ago that the global peer Mondi (MNDI) was thinking of trying to do a merger deal. I don’t know whether there was a discussion or not, but nothing has formally hit the wires though I would get the rationale. Certainly it is striking to see the historically good UK/European business now being extended into the US too.
As for the year to the end of April 2022, it is talking about being ‘excited about the future’ and that there has been ‘progress in recent months’. I would expect it to get back to a mid teens EV:ebit multiple in the current financial year, an expectation which back in 2018-19 pushed the share price to over 500p (compared to the current 423p). There were a few changes back then and no doubt there will be a few more over the next year or two - including the impact of any sustained further strength in the value of the pound - but ultimately there is general progress...and much more than just ESG attractions. I remain a buyer.
Filed under: DS Smith, Braveheart Investment Group, Lekoil, Directa Plus, TomWinnifrith.com, Vertu Motors
RISK WARNING & DISCLAIMER - FiveFreeShareTips.com tips are provided by independent authors via a common carrier platform and do not represent the opinions of FiveFreeShareTips.com. FiveFreeShareTips.com does not accept responsibility for or make any warranties in connection with or recommend that you or any third party rely on such information. The information available at FiveFreeShareTips.com and via emails you receive from [email protected] are for your general information and use and are not intended to address your particular requirements. In particular, the information does not constitute any form of advice or recommendation by the tipsters or FiveFreeShareTips.com and is not intended to be relied upon by users in making (or refraining from making) any investment decisions. Trading shares involves the risk of loss. The tipsters and FiveFreeShareTips.com shall not be liable for any losses or other damages incurred. The value of investments can go up or down and the past is not necessarily a guide of future performance.
Well actually it will be six. One every week day and one on Sunday, each landing with you at 11 AM sharp.
Unlike other services (which may always have a vested interest) we pride ourselves on our impartiality and cover all small caps including AIM. the Standard List, The Wider Main Market and NEX.
We cover small caps, penny shares, FTSE 350 stocks and blue chips. We look for red hot penny shares, Warren Buffett style value investments with yield and growth stocks. There is no technical analysis in our work just solid fundamental analysis from a team of experts with decades of stockmarket experience.
You will not agree with all we publish but if you are interested in small caps you cannot afford to ignore it either. Yo'll never be charged for the free share tips from Five Free Share Tips and given the star writers involved you know that they will move share prices.
There's no telephone number or postal address required and there is no charge, ever, for your Five Free Share Tips membership. Just free shares tips every day apart from Saturday And each day's share tip will not just be a few thoughts cobbled together but will be detailed analysis from experts.
Our experts do not just earn their living from writing. All own shares. If they own shares in a stock they cover they will declare it and will not sell until after advising a sell to our readers. And why not our tips are so good that why shouldn't our readers put their money where their mouth is?
Don't just take our word for it! Judge us on the calibre of our free share tips and join today to start receiving them from September 1 2017. If you don't like what you get delivered to your inbox unsubscribe and you will never hear from us again. So why not give it a go? Sign Up Now
We've put together a panel of top tipsters, including:
Tom Winnifrith, in his 27th year writing about shares, noted fraudbuster & dubbed "The maverick Tipster"
Chris Bailey, City whizz kid turned financial guru, rated as one of the top 50 commentators on shares on twitter, founder of Financial Orbit
Steve Moore, has worked with Tom Winnifrith for all bar 3 weeks of his working life - a noted commentator on value stocks
Malcolm Stacey, The Grandfather of Share Blogging, the founder of ShareCrazy & a best selling autthor of stockmarket books
Lucian Miers, the Bard of the Boleyn, one of the UK's best known short sellers
Gary Newman, writes about value investing on AIM, speciality is in share tips on oil and mining companies
Nigel Somerville, The Deputy Sheriff of AIM, an expert in forensic analysis a skill used to bust frauds but also to tip true value investments
The team from HotStockRockets, specialising in AIM and small cap shares which will fly on a three month view
Remember to book your place at the UK Investor Show 2018. The UK’s top investment show taking place on Saturday 21 April 2018 at the Queen Elizabeth II Conference Centre in Westminster, London. The show will feature a unique line-up of top speakers including Nigel Wray, tech queen Vin Murria, Dave Lenigas, Mark Slater, Tom Winnifrith, Adam Reynolds, Ed, Croft, Nick Leslau Luke Johnson and Dr Johnny Hon as well as 135 exhibiting small cap companies.
The hot share tips given here are of necessity, general. They cannot relate to the individual circumstances of investors. Anyone considering following the share tips contained here should seek independent advice from a Financial Conduct Authority authorised Stockbroker or Financial Adviser. We cannot be held liable if individuals suffer losses through following share tips contained on this site or emailed out as free share tips. The value of investments can go down as well as up. The past is not necessarily a guide to future performance. Investing in shares can lose you part or all of your capital although the potential returns are theoretically unlimited. The difference between the buy share price and the sell share price for smaller company shares (penny shares) can be significant. Profits from dealing in shares may be liable to tax - the level of tax and bases of relief from tax are subject to change. Changes in the rates of exchange may have an adverse effect on the value or price of an investment in sterling terms if it is denominated in a foreign currency. Some of the shares recommended on this site will be smaller company shares. By their nature such investments can be relatively illiquid and thus hard to trade. And that makes such investments more of a high risk than larger company shares (or 'small caps'/'penny shares'). FiveFreeShareTips.com & its sister site ShareProphets.com defines a smaller company share as any stock traded on AIM or NEX or which has a market capitalisation of less than £300 million.