Thursday, 3 December 2015

A few thoughts on corrugated board...and DS Smith

I wrote back in June that:

On company conference calls I listened to today, I remain interested/attracted by the management-led good performance by the UK-listed corrugated board company DS Smith...

Since then the shares have done...rather well:


And the reason for this?  Good deals and geographic expansion...


...sensible financing too with the debt ratio now too high and the company continuing to generate reasonable underlying free cash flow (7% odd yield)...  


...and positive sales-mix to offset the impact of input costs...

...and good underlying volumes too:

Corrugated packaging is hardly the most exciting area but with good linkage to evolving consumer trends and the need for underlying users to differentiate their product...

...a prospective x12 EV/ebit ratio with a 3%+ yield (and that aforementioned good free cash flow) is no disaster.  I can see 450p over the next year.  


Buying on a bad day below 400p in anticipation of the above is the level for non-shareholders.  

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