Broker snap: WH Smith to prove resilient

8th Jun 2010 12:59

It's business as usual at newsagent WH Smith with FinnCap predicting that the company's interim management statement (IMS) will not prompt any earnings estimate upgrades.Though like for like sales in the 14 weeks to 5 June were slightly weaker than expected the broker thinks that "the statement at the end of Smith's IMS that we remain confident in the outcome for the full year, looks like code for don't change forecasts".The broker remains a fan of the stock, noting that it trades on a price/earnings ratio of 11.5 based on projected calendar 2010 earnings, versus a sector average of 12.9."We expect Smith to prove more resilient than most in the challenging retail environment we anticipate in the coming year. The apparent ability to deliver in-line PTP [pre-tax profit] despite weaker than anticipated revenues signals that resilience," said FinnCap analyst David Stoddart.