WH Smith PLC (SMWH.L) | Investment Case

1. Company Snapshot

1.a. Company Description

WH Smith PLC operates as a retailer in the United Kingdom and internationally.It operates in two segments, Travel and High Street.The Travel segment offers news, books, and convenience for travelling customers.

As of August 31, 2021, it operated 1, 166 units primarily in airports, hospitals, railway stations, motorway service areas, and workplaces.The High Street segment sells stationery products, including greetings cards, general stationery, art and craft, and gifting products; news and impulse products, such as newspapers, magazines, confectionery, and drinks; and books.It operated 544 stores.

This segment also offers its stationery, books, magazines, and gifts through whsmith.co.uk; personalized greetings cards and gifts through funkypigeon.com; pens through cultpens.com; and personalized stationery products through treeofhearts.co.uk and dottyaboutpaper.co.uk websites.The company was founded in 1792 and is based in Swindon, the United Kingdom.

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1.b. Last Insights on SMWH

WH Smith PLC's recent performance was negatively driven by an earnings per share (EPS) miss in its Full Year 2024 results, despite a 7.0% revenue increase to UK£1.92b. The company's expansion plans, including targeting 500 stores in North America by 2028, may be overshadowed by the current challenging market environment, as highlighted by weak trade data from China. Additionally, the company's decision to sell vinyl records in 80 high street shops may not be enough to offset the broader market headwinds.

1.c. Company Highlights

Last Price	694.5
Change Percentage	0.80%
Open	705
Previous Close	689
Market Cap ( Millions)	865
Volume	284935
Year High	1315
Year Low	585.5
M A 50	661.12
M A 200	895.56

FCF Yield	22.43%
Dividend Yield	4.02%
ROE	1.94%
Debt / Equity	370.59%
Net Debt / EBIDTA	405.56%
Price To Book	2.91
Price Earnings Ratio	126.99
Price To FCF	4.46
Price To sales	0.45
EV / EBITDA	7.26

2. Transcript Summary

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3. NewsRoom

FTSE 100 Live: Global stocks find support, Lloyds thrown Curve ball over deal

Nov -19

Source: proactiveinvestors.com

FTSE 100 Live: Blue-chips search for direction as inflation eases, Lloyds buys digital wallet

Nov -19

Source: proactiveinvestors.com

How Recent Events Are Rewriting the Story for WH Smith

Nov -08

Source:

WH Smith postpones annual results amid probe into US accounting error

Oct -29

Source:

How Recent Developments Are Rewriting the Story for WH Smith

Oct -24

Source:

Modella Capital acquires majority of Claire’s UK stores, saving 1,000 jobs

Sep -30

Source:

Almost 1,000 Claire’s jobs at risk despite rescue deal

Sep -29

Source:

How Recent Profit Concerns Are Changing the WH Smith Investment Story

Sep -22

Source:

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.48%)

6. Segments

Travel

Expected Growth: 7%

WH Smith PLC's 7% travel segment growth is driven by increasing passenger traffic, higher average transaction values, and strategic store locations in high-traffic areas. Additionally, the company's focus on convenience, travel essentials, and partnerships with travel operators contribute to its growth momentum.

High Street

Expected Growth: 5%

High Street segment of WH Smith PLC is driven by strategic store refurbishments, effective cost management, and a strong stationery market. Additionally, the company's focus on convenience and travel locations, as well as its growing online presence, contribute to its 5% growth rate.

7. Detailed Products

Stationery

A wide range of stationery products including pens, pencils, notebooks, and more

Books

A vast selection of fiction and non-fiction books for adults and children

News and Magazines

A wide range of newspapers and magazines covering news, entertainment, and lifestyle

Travel Accessories

A variety of travel-related products including luggage tags, travel wallets, and more

Gifts and Impulse

A selection of gifts, souvenirs, and impulse buys including toys, games, and more

In-Store Services

A range of services including photo printing, lottery tickets, and more

8. WH Smith PLC's Porter Forces

Forces Ranking

Threat Of Substitutes

WH Smith PLC faces moderate threat from substitutes, as customers can opt for digital alternatives such as e-books and online news sources. However, the company's strong brand presence and diversified product offerings mitigate this threat to some extent.

Bargaining Power Of Customers

WH Smith PLC's customers have relatively low bargaining power, as they are individual consumers with limited ability to negotiate prices. The company's large customer base and diversified product offerings also reduce customer bargaining power.

Bargaining Power Of Suppliers

WH Smith PLC's suppliers, including publishers and distributors, have moderate bargaining power. While the company relies on these suppliers for its products, it also has some negotiating power due to its large scale and diversified product offerings.

Threat Of New Entrants

The threat of new entrants is low for WH Smith PLC, as the company has a strong brand presence and established relationships with suppliers. Additionally, the company's diversified product offerings and large scale make it difficult for new entrants to compete.

Intensity Of Rivalry

The intensity of rivalry in the retail industry is high, with WH Smith PLC facing competition from other retailers, online platforms, and supermarkets. The company must continually innovate and adapt to changing consumer preferences to maintain its market share.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	66.14%
Debt Cost	5.80%
Equity Weight	33.86%
Equity Cost	11.95%
WACC	7.88%
Leverage	195.31%

11. Quality Control: WH Smith PLC passed 6 out of 9 key points

Strong Liquidity

Low Deb

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

BHG

A-Score: 4.0/10

Value: 7.6

Growth: 2.4

Quality: 2.9

Yield: 0.0

Momentum: 9.5

Volatility: 1.7

1-Year Total Return ->

Ceconomy

A-Score: 3.7/10

Value: 6.4

Growth: 2.7

Quality: 2.3

Yield: 0.6

Momentum: 8.0

Volatility: 2.0

1-Year Total Return ->

Fenix Outdoor

A-Score: 3.6/10

Value: 5.2

Growth: 4.0

Quality: 3.8

Yield: 3.1

Momentum: 0.5

Volatility: 5.0

1-Year Total Return ->

Momentum Group

A-Score: 3.6/10

Value: 1.6

Growth: 6.4

Quality: 6.0

Yield: 0.6

Momentum: 2.0

Volatility: 4.7

1-Year Total Return ->

WH Smith

A-Score: 3.5/10

Value: 5.7

Growth: 5.8

Quality: 3.4

Yield: 4.4

Momentum: 0.5

Volatility: 1.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-5.88%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

7.88%

WH Smith PLC - GB00B2PDGW16

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on SMWH

1.c. Company Highlights

Stable Momentum

Medium Volatility

Fairly Valued

Lower Growth

Average Yield

Expensive

Average Quality

Earnings Beats

Revenues Miss

Average Growth

Earnings Miss

Lower Quality

More Volatile

Weak Momentum

2. Transcript Summary

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.48%)

6. Segments

Travel

Expected Growth: 7%

High Street

Expected Growth: 5%

7. Detailed Products

Stationery

Books

News and Magazines

Travel Accessories

Gifts and Impulse

In-Store Services

8. WH Smith PLC's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: WH Smith PLC passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

6.94$

Current Price

6.95$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA