LSE:SN.

Stock Analysis Report

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Market Cap

UK£13.6b

Last Updated

2021/06/23 01:07 UTC

Data Sources

Company Financials +

Executive Summary

Smith & Nephew plc, together with its subsidiaries, develops, manufactures, markets, and sells medical devices worldwide. More Details


Snowflake Analysis

Established dividend payer with adequate balance sheet.


Similar Companies

Share Price & News

How has Smith & Nephew's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SN. is less volatile than 75% of UK stocks over the past 3 months, typically moving +/- 3% a week.

Volatility Over Time: SN.'s weekly volatility (3%) has been stable over the past year.


Market Performance


7 Day Return

0.1%

SN.

-0.7%

GB Medical Equipment

-1.2%

GB Market


1 Year Return

4.1%

SN.

10.4%

GB Medical Equipment

17.8%

GB Market

Return vs Industry: SN. underperformed the UK Medical Equipment industry which returned 4.9% over the past year.

Return vs Market: SN. underperformed the UK Market which returned 16.7% over the past year.


Shareholder returns

SN.IndustryMarket
7 Day0.1%-0.7%-1.2%
30 Day-0.8%0.1%0.7%
90 Day14.7%15.7%6.6%
1 Year6.1%4.1%12.5%10.4%23.4%17.8%
3 Year17.4%10.8%20.7%13.8%14.2%1.2%
5 Year38.4%25.6%39.7%28.0%53.2%24.3%

Long-Term Price Volatility Vs. Market

How volatile is Smith & Nephew's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Smith & Nephew undervalued compared to its fair value and its price relative to the market?

42.16x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: SN. (£15.4) is trading above our estimate of fair value (£14.99)

Significantly Below Fair Value: SN. is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: SN. is good value based on its PE Ratio (41.9x) compared to the UK Medical Equipment industry average (50.8x).

PE vs Market: SN. is poor value based on its PE Ratio (41.9x) compared to the UK market (24.9x).


Price to Earnings Growth Ratio

PEG Ratio: SN. is poor value based on its PEG Ratio (2.2x)


Price to Book Ratio

PB vs Industry: SN.'s PB Ratio (3.6x) is in line with the GB Medical Equipment industry average.


Future Growth

How is Smith & Nephew forecast to perform in the next 1 to 3 years based on estimates from 15 analysts?

19.2%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SN.'s forecast earnings growth (19.2% per year) is above the savings rate (0.9%).

Earnings vs Market: SN.'s earnings (19.2% per year) are forecast to grow faster than the UK market (17.7% per year).

High Growth Earnings: SN.'s earnings are forecast to grow, but not significantly.

Revenue vs Market: SN.'s revenue (6.4% per year) is forecast to grow faster than the UK market (5.3% per year).

High Growth Revenue: SN.'s revenue (6.4% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SN.'s Return on Equity is forecast to be low in 3 years time (15.1%).


Past Performance

How has Smith & Nephew performed over the past 5 years?

-2.4%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SN. has a large one-off loss of $134.0M impacting its December 31 2020 financial results.

Growing Profit Margin: SN.'s current net profit margins (9.8%) are lower than last year (11.7%).


Past Earnings Growth Analysis

Earnings Trend: SN.'s earnings have declined by 2.4% per year over the past 5 years.

Accelerating Growth: SN.'s has had negative earnings growth over the past year, so it can't be compared to its 5-year average.

Earnings vs Industry: SN. had negative earnings growth (-25.2%) over the past year, making it difficult to compare to the Medical Equipment industry average (13.8%).


Return on Equity

High ROE: SN.'s Return on Equity (8.5%) is considered low.


Financial Health

How is Smith & Nephew's financial position?


Financial Position Analysis

Short Term Liabilities: SN.'s short term assets ($4.7B) exceed its short term liabilities ($1.7B).

Long Term Liabilities: SN.'s short term assets ($4.7B) exceed its long term liabilities ($4.0B).


Debt to Equity History and Analysis

Debt Level: SN.'s debt to equity ratio (66%) is considered high.

Reducing Debt: SN.'s debt to equity ratio has increased from 37.2% to 66% over the past 5 years.

Debt Coverage: SN.'s debt is well covered by operating cash flow (26.8%).

Interest Coverage: SN.'s interest payments on its debt are well covered by EBIT (7.7x coverage).


Balance Sheet


Dividend

What is Smith & Nephew current dividend yield, its reliability and sustainability?

1.74%

Current Dividend Yield


Dividend Yield vs Market

Notable Dividend: SN.'s dividend (1.75%) is higher than the bottom 25% of dividend payers in the UK market (1.29%).

High Dividend: SN.'s dividend (1.75%) is low compared to the top 25% of dividend payers in the UK market (4.04%).


Stability and Growth of Payments

Stable Dividend: SN.'s dividends per share have been stable in the past 10 years.

Growing Dividend: SN.'s dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (73.2%), SN.'s dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: SN.'s dividends in 3 years are forecast to be well covered by earnings (41.9% payout ratio).


Next Steps

Management

How experienced are the management team and are they aligned to shareholders interests?

3.4yrs

Average management tenure


CEO

Roland Diggelmann (53 yo)

1.58yrs

Tenure

US$1,697,773

Compensation

Mr. Roland D. Diggelmann serves as Director at Sonova Holding AG sic e June 15, 2021. He has been Chief Executive Officer of Smith & Nephew plc since November 1, 2019 and serves as its Director since April...


CEO Compensation Analysis

Compensation vs Market: Roland's total compensation ($USD1.70M) is below average for companies of similar size in the UK market ($USD3.56M).

Compensation vs Earnings: Roland's compensation has been consistent with company performance over the past year.


Leadership Team

Experienced Management: SN.'s management team is considered experienced (3.8 years average tenure).


Board Members

Experienced Board: SN.'s board of directors are not considered experienced ( 1.2 years average tenure), which suggests a new board.


Ownership

Who are the major shareholders and have insiders been buying or selling?


Insider Trading Volume

Insider Buying: SN. insiders have only sold shares in the past 3 months.


Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Top Shareholders

Company Information

Smith & Nephew plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: Smith & Nephew plc
  • Ticker: SN.
  • Exchange: LSE
  • Founded: 1856
  • Industry: Health Care Equipment
  • Sector: Healthcare
  • Market Cap: UK£13.616b
  • Shares outstanding: 877.90m
  • Website: https://www.smith-nephew.com

Number of Employees


Location

  • Smith & Nephew plc
  • Building 5
  • Croxley Park
  • Watford
  • Hertfordshire
  • WD18 8YE
  • United Kingdom

Listings


Biography

Smith & Nephew plc, together with its subsidiaries, develops, manufactures, markets, and sells medical devices worldwide. The company offers knee implant products for knee replacement procedures; hip impla...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2021/06/23 01:07
End of Day Share Price2021/06/22 00:00
Earnings2020/12/31
Annual Earnings2020/12/31


Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.