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Risk Warning
13/10/2011
Shares in WH Smith shed 1.6 percent, underperforming a 0.5 percent fall by the FTSE 250 index, after the newspapers, books and stationery retailer posts an as-expected 4.5 percent rise in full-year profit, with investors booking some profits after a strong run ahead of the numbers.
WH Smith made a pretax profit of 93 million pounds in the year to August 31, in line with analysts average forecast of 93.3 million pounds, according to Thomson Reuters data, and up from the 89 million pounds made in 2009-10.
"Profits and EPS are all comfortably ahead, and together with the net cash pile and ongoing cost savings identified, the retailer is certainly in good shape in spite of a fall in like-for-like sales," said Richard Curr, head of dealing for CFD specialist Prime Markets.
"In the interim however, Prime Markets take the view that the shares are due some consolidation having outperformed the sector, and although the performance is supported technically by rising moving 100 and 200 day averages, investors should take profits ahead of a likely retest of the 100-day level at 492 pence in the coming weeks," Curr adds.
Espirito Santo Investment Bank, however, repeats its "buy" rating and 620 pence fair value on WH Smith.
"While results are in line with market expectations, there may be some disappointment that we haven't seen a small beat, but we think that is a function of the difficult trading environment," Espirito Santo says in a note.
Securities and Derivatives markets may be subject to rapid and unexpected price movements and past performance is not necessarily a guide to future performance. Trading in these markets is generally considered to be suitable only for the more experienced investor as it carries a high degree of risk. An investor may not receive back the amount of their original investment and in certain circumstances may be liable for a sum that is greater than their original investment. If in any doubt, please seek independent financial advice.