The FTSE 100 packaging firm hasn’t been the most consistent stock in 2018. Things didn’t get off to a great start, with the company falling from an opening price of £5.22 to an 8 month low of £4.58 by early March. Yet by June the stock had done a 180, rocketing above £5.80 for the first time in its history.
Sadly, that peak was not to last, with the aftermath of the firm’s full year results in mid-June eventually dragging the stock back below £5. Since then it has been bouncing between £4.90 and £5.20, with DS Smith PLC now at a current trading price of £4.96.
On the surface June’s annual figures were fantastic. At a constant currency basis revenue rose 17% to £5.765 million, as did adjusted pre-tax profit, which hit £473 million. Basic earnings per share, meanwhile, jumped 10% to 24.9p, with the adjusted number climbing 7% to 35.5p.
However, investors’ main takeaway ended up being something far more negative. CEO Miles Roberts told the Financial Times that the company had ‘heavily scaled back’ its intentions for the home market, and that Brexit uncertainty meant it didn’t have any ‘major expansion plans in the UK’.
In terms of Tuesday’s first quarter statement, investors will want revenue growth to have continued at the same pace as during the last financial year. A word on how the integration of Spanish peer Europac – which DS Smith bought for £1.45 billion at the start of June – will also be welcome.
DS Smith PLC (LON:SMDS) has a consensus rating of ‘Buy’ alongside an average target price of £5.68.
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