Small Cap Report - SMWH, WYN, ZATT, SFR, FOUR, FIF, TTR, FDL

Wednesday, Jan 23 2013 by
3

WH Smith (LON:SMWH)

Good morning. Interesting trading statement from W H Smith (SMWH). Despite reporting LFL sales down 5% for the 20 weeks to 20 Jan 2013 (which would normally be pretty disastrous for profits), they report a "good profit performance" (although not quantified in absolute, or relative terms).

This has been achieved by tightly controlling costs, and a planned strong increase in gross margin. This is pretty impressive, I've not heard of such a big (5%) drop in LFL sales being recouped through margin improvements & cost control before.

I still can't shake off the feeling that W H Smith is an accident waiting to happen - it's as old economy as you can get - books, greetings cards, travel, etc. Yet somehow it still manages to not only survive, but to apparently prosper. Perplexing.

Wynnstay (LON:WYN)

Wynnstay (WYN) is an agricultural products group, but reading their results (Finals to 31 Oct 2012), they also have a retail division, including 21 pet stores, so a potential roll-out story there perhaps?

They report record results, with revenue up 9% to £376m, and profit up 13% to £7.8m. Note the wafer-thin profit margin there. EPS is up 16% to 35p. That is ahead of forecast of 32.8p EPS, so looks good, but a share price of 468p means the PER is 13.4, not exactly a bargain.

The divi yield of 1.8% is unexciting too (total of 8.5p for the year). It has debt  of £13.8m (compared with a £79m mkt cap), so all in all this looks fully priced to me, so not of any interest.

£10m mkt cap computer games company Zattikka (ZATT) has disappointed in its short history as a Listed company, with the shares halving after a profits warning in Nov 2012. Their trading statement today indicates that things are not getting any worse, with trading in line with the expectations set out in Nov. I generally avoid this sector, after several bad experiences in the past. These companies constantly have to run to stand still, with frequent profits warnings if new releases (which have an extremely short shelf life, but up-front costs) flop, as inevitably they will from time to time.

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WH Smith PLC is a United Kingdom-based retailer in convenience, books and news for travelling customers. The Company is a high street stationer, bookseller and newsagent. The Company operates through two segments: High Street and Travel. The Company's Travel business sells its products to cater for people on the move or in need of a convenience offer. The Travel business operates from approximately 768 units mainly in airports, railway stations, motorway service areas and hospitals. The High Street business sells a range of Stationery (including greetings cards, general stationery, art and craft, and gifting), News and Impulse (including newspapers, magazines, confectionery and drinks) and Books. The High Street business operates from approximately 612 High Street stores. The Company's digital business operates through two Websites: www.whsmith.co.uk and www.funkypigeon.com. It also operates across Australia, South East Asia, India and the Middle East. more »

LSE Price
1926p
Change
-0.9%
Mkt Cap (£m)
2,112
P/E (fwd)
16.5
Yield (fwd)
3.0

Wynnstay Group plc is a United Kingdom-based company, which is a supplier of products and services to the agricultural industry and the rural economy. The Company's segments include Agriculture, which is engaged in manufacturing and supply of animal feeds, fertilizer, seeds and associated agricultural products; Specialist Retail, which supplies to a range of specialist products to farmers, smallholders and pet owners, and Other. Its Feed division, which operates approximately two compound feed mills and one blending plant, offers a range of animal nutrition products to the agricultural market. It operates approximately 50 Wynnstay Stores, which provide a range of products for farmers and rural dwellers. Its Just for Pets, which is based in Hartlebury in Worcestershire, has over 20 specialist pet product stores operating on retail sites throughout the West Midlands. Its Youngs Animal Feeds manufactures equine and small animal feeds from its production facility at Standon. more »

LSE Price
407.5p
Change
-1.2%
Mkt Cap (£m)
81.6
P/E (fwd)
11.0
Yield (fwd)
3.3




  Is LON:SMWH fundamentally strong or weak? Find out More »


1 Comment on this Article show/hide all

behcet 23rd Jan '13 1 of 1

WHSmith is not as old school as you might assume. They're working towards distributing Kobo ebook readers and ebooks, and have internet presence. Kobo is second only to Kindle globally.

As far as I'm concerned you still need good old shops in trains stations and airports etc, as you can buy a bottle of water from the internet when are about to board on a plane. And you know and accept that you're being overcharged in these conditions.

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About Paul Scott

Paul Scott

I trained as an accountant with a Top 5 firm, but that was so boring that I spent too much time in the 1990s being a disco bunny, and busting moves on the dancefloor, and chilling out with mates back at either my house or theirs, and having a lot of fun!Then spent 8 years as FD for a ladieswear retail chain called "Pilot", leaving on great terms in 2002 - having been a key player in growing the business 10 fold. If the truth be told, I partied pretty hard at the weekends too, so bank reconciliations on Monday mornings were more luck than judgement!! But they were always correct.I got bored with that and decided to become a professional small caps investor in 2002. I made millions, but got too cocky, and lost the lot in 2008, due to excessive gearing. A miserable, wilderness period occurred from 2008-2012.Since then, the sun has begun to shine again! I am now utterly briliant again, and immerse myself in small caps, and am a walking encyclopedia on the subject. I love writing a daily report for Stockopedia.com on most weekday mornings, constantly researching daily results & trading updates for small caps. Cheese! more »

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