LSE:SMDS

Stock Analysis Report

Executive Summary

DS Smith Plc designs and manufactures corrugated packaging and plastic packaging for consumer goods.

Rewards

Trading at 26.2% below its fair value

Earnings are forecast to grow 8.91% per year

Earnings grew by 16.5% over the past year

Risk Analysis

Has a high level of debt

Unstable dividend track record

Shareholders have been diluted in the past year



Snowflake Analysis

Solid track record average dividend payer.


Similar Companies

Share Price & News

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


Latest Share Price and Events

Stable Share Price: SMDS has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

8.7%

SMDS

3.2%

GB Packaging

1.7%

GB Market


1 Year Return

21.5%

SMDS

26.1%

GB Packaging

8.1%

GB Market

Return vs Industry: SMDS underperformed the UK Packaging industry which returned 26.1% over the past year.

Return vs Market: SMDS exceeded the UK Market which returned 8.1% over the past year.


Shareholder returns

SMDSIndustryMarket
7 Day8.7%3.2%1.7%
30 Day-0.1%3.2%0.1%
90 Day3.5%8.3%0.6%
1 Year27.4%21.5%30.4%26.1%13.8%8.1%
3 Year11.9%-6.7%33.2%20.0%19.2%4.0%
5 Year50.8%18.1%91.9%63.4%40.2%8.0%

Price Volatility Vs. Market

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


Simply Wall St News

Valuation

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

26.2%

Undervalued compared to fair value


Share Price vs. Fair Value

Below Fair Value: SMDS (£3.83) is trading below our estimate of fair value (£5.19)

Significantly Below Fair Value: SMDS is trading below fair value by more than 20%.


Price To Earnings Ratio

PE vs Industry: SMDS is poor value based on its PE Ratio (17.2x) compared to the Packaging industry average (14.5x).

PE vs Market: SMDS is poor value based on its PE Ratio (17.2x) compared to the UK market (17.3x).


Price to Earnings Growth Ratio

PEG Ratio: SMDS is poor value based on its PEG Ratio (1.9x)


Price to Book Ratio

PB vs Industry: SMDS is overvalued based on its PB Ratio (1.6x) compared to the XE Packaging industry average (1.6x).


Next Steps

Future Growth

How is DS Smith forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

8.9%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SMDS's forecast earnings growth (8.9% per year) is above the savings rate (0.5%).

Earnings vs Market: SMDS's earnings (8.9% per year) are forecast to grow slower than the UK market (12.4% per year).

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

Revenue vs Market: SMDS's revenue (1.8% per year) is forecast to grow slower than the UK market (3.6% per year).

High Growth Revenue: SMDS's revenue (1.8% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SMDS's Return on Equity is forecast to be low in 3 years time (13%).


Next Steps

Past Performance

How has DS Smith performed over the past 5 years?

14.6%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SMDS has high quality earnings.

Growing Profit Margin: SMDS's current net profit margins (4.8%) are higher than last year (4.4%).


Past Earnings Growth Analysis

Earnings Trend: SMDS's earnings have grown by 14.6% per year over the past 5 years.

Accelerating Growth: SMDS's earnings growth over the past year (16.5%) exceeds its 5-year average (14.6% per year).

Earnings vs Industry: SMDS earnings growth over the past year (16.5%) exceeded the Packaging industry 7.5%.


Return on Equity

High ROE: SMDS's Return on Equity (9.5%) is considered low.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is DS Smith's financial position?


Financial Position Analysis

Short Term Liabilities: SMDS's short term assets (£2.1B) do not cover its short term liabilities (£2.5B).

Long Term Liabilities: SMDS's short term assets (£2.1B) do not cover its long term liabilities (£2.9B).


Debt to Equity History and Analysis

Debt Level: SMDS's debt to equity ratio (84.7%) is considered high.

Reducing Debt: SMDS's debt to equity ratio has increased from 70.1% to 84.7% over the past 5 years.

Debt Coverage: SMDS's debt is well covered by operating cash flow (20.2%).

Interest Coverage: SMDS's interest payments on its debt are well covered by EBIT (7.2x coverage).


Balance Sheet

Inventory Level: SMDS has a high level of physical assets or inventory.

Debt Coverage by Assets: SMDS's debt is not covered by short term assets (assets are 0.8x debt).


Next Steps

Dividend

What is DS Smith's current dividend yield, its reliability and sustainability?

4.23%

Current Dividend Yield


Upcoming Dividend Payment

Purchase DS Smith before the 'Buy Limit' to receive their next dividend payment.


Dividend Yield vs Market

company4.2%marketbottom25%2.0%markettop25%5.2%industryaverage2.8%forecastin3Years4.6%

Current dividend yield vs market & industry

Notable Dividend: SMDS's dividend (4.24%) is higher than the bottom 25% of dividend payers in the UK market (1.96%).

High Dividend: SMDS's dividend (4.24%) is low compared to the top 25% of dividend payers in the UK market (5.21%).


Stability and Growth of Payments

Stable Dividend: SMDS's dividend payments have been volatile in the past 10 years.

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


Current Payout to Shareholders

Dividend Coverage: With its reasonable payout ratio (73.9%), SMDS's dividend payments are covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: SMDS's dividends in 3 years are forecast to be well covered by earnings (49.3% payout ratio).


Next Steps

Management

What is the CEO of DS Smith's salary, the management and board of directors tenure and is there insider trading?

6.3yrs

Average management tenure


CEO

Miles Roberts (55yo)

9.6yrs

Tenure

UK£3,017,000

Compensation

Mr. Miles W. Roberts has been Group Chief Executive Officer of DS Smith plc since May 4, 2010 at DS Smith Paper Limited. He served as Chief Executive at DS Smith Packaging Limited. Mr. Roberts served as th ...


CEO Compensation Analysis

Compensation vs Market: Miles's total compensation ($USD3.96M) is about average for companies of similar size in the UK market ($USD3.67M).

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


Management Age and Tenure

6.3yrs

Average Tenure

Experienced Management: SMDS's management team is seasoned and experienced (6.3 years average tenure).


Board Age and Tenure

5.9yrs

Average Tenure

57.5yo

Average Age

Experienced Board: SMDS's board of directors are considered experienced (5.9 years average tenure).


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Ownership Breakdown

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 16.4%.


Management Team

  • Colin McIntyre

    Head of Paper & Recycling

    • Tenure: 0yrs
  • Miles Roberts (55yo)

    Group Chief Executive & Executive Director

    • Tenure: 9.6yrs
    • Compensation: UK£3.02m
  • Rachel Stevens

    Investor Relations Director

    • Tenure: 0yrs
  • Mark Smith

    Head of Plastics

    • Tenure: 0yrs
  • Adrian R. Marsh (52yo)

    Group Finance Director & Executive Director

    • Tenure: 6.3yrs
    • Compensation: UK£1.55m
  • Hugo Fisher

    Group Communications Director

    • Tenure: 6.5yrs
  • Stefano Rossi

    Head of Corrugated Packaging

    • Tenure: 0yrs
  • Iain Simm

    Group General Counsel & Company Secretary

    • Tenure: 3.5yrs
  • Keith Ledbetter

    Chief Financial Officer of Global Plastics and North America Packaging & Paper Divisions

    • Tenure: 3.3yrs
  • Alan Taylor

    Interim Group Human Resources Director

    • Tenure: 0yrs

Board Members

  • Celia Baxter (61yo)

    Non-Executive Director

    • Tenure: 0.2yrs
  • Gareth Davis (69yo)

    Independent Chairman

    • Tenure: 7.9yrs
    • Compensation: UK£276.00k
  • Rupert Soames (60yo)

    Senior Independent Director

    • Tenure: 0.3yrs
    • Compensation: UK£10.00k
  • David Robbie (55yo)

    Non-Executive Director

    • Tenure: 0.7yrs
    • Compensation: UK£3.00k
  • Louise Smalley (51yo)

    Non-Executive Director

    • Tenure: 5.5yrs
    • Compensation: UK£59.00k
  • Chris Britton (61yo)

    Non-Executive Director

    • Tenure: 6.8yrs
    • Compensation: UK£59.00k
  • Miles Roberts (55yo)

    Group Chief Executive & Executive Director

    • Tenure: 9.6yrs
    • Compensation: UK£3.02m
  • Adrian R. Marsh (52yo)

    Group Finance Director & Executive Director

    • Tenure: 6.3yrs
    • Compensation: UK£1.55m

Company Information

DS Smith Plc's company bio, employee growth, exchange listings and data sources


Key Information

  • Name: DS Smith Plc
  • Ticker: SMDS
  • Exchange: LSE
  • Founded: 1940
  • Industry: Paper Packaging
  • Sector: Materials
  • Market Cap: UK£5.245b
  • Shares outstanding: 1.37b
  • Website: https://www.dssmith.com

Number of Employees


Location

  • DS Smith Plc
  • Regent’s Place
  • 7th Floor
  • London
  • Greater London
  • NW1 3AX
  • United Kingdom

Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
DITH.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDNov 1995
SMDSLSE (London Stock Exchange)YesOrdinary SharesGBGBPNov 1995
SMDSLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPNov 1995
1KRDB (Deutsche Boerse AG)YesOrdinary SharesDEEURNov 1995

Biography

DS Smith Plc designs and manufactures corrugated packaging and plastic packaging for consumer goods. The company offers transit and transport, consumer, retail and shelf ready, online and e-retail, industr ...


Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2019/12/12 20:35
End of Day Share Price2019/12/12 00:00
Earnings2019/10/31
Annual Earnings2019/04/30


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.