DS Smith Share Price Forecast December 2021 – Time to Buy SMDS?
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Shares of British multinational packaging business DS Smith (LSE: SMDS) are in the red today after closing at £375.4 as of December 20th (09:28 GMT). DS Smith has continued to experience good results despite the Omicron variant, inflationary concerns and a slow recovery. The company is starting to regain its mojo over the last couple of sessions after dipping in the immediate weeks preceding them.
DS Smith – Technical Analysis
The financial statement from DS Smith indicates that the market cap is at £529.619 billion and total assets worth £892.8 billion. Revenue for 2020 was at £59760 billion with a profit margin of 3.05% compared to £604.30 billion in 2019.
Oscillators such as Relative Strength Index (14)(45.8), Stochastic %K (14, 3, 3)(64.7), Commodity Channel Index (20)(−7.7 ), Average Directional Index (14)(19.8) and Awesome Oscillator(2.6) are neutral. Moving averages such as Exponential Moving Average (10)(381.5), Simple Moving Average (10)(383.2), Exponential Moving Average (20)(380.7), Simple Moving Average (20)(377.7) and Exponential Moving Average (30)(381.7) are indicating a sell action.
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Recent Developments
Among the strong results DM Smith, the revenue increase of 22% from the corresponding six months of 2020 on a constant currency basis is noteworthy. Post-tax profits also rose by 88%. The company has also increased its dividends with this big increase in earnings. This has made its dividend yield at 3.4% which is a bit below the FTSE 100 average of 3.5%. As the UK’s inflation is forecast to be 4% in 2022, any shares yielding close to that would be recommended right now.
According to statements from the company, the demand for corrugated boxes hit a record as people ordered goods online and the COP26 climate conference prompted more interest in sustainable packaging. Due to supply chains remaining solid, the company was able to increase prices to offset rising costs.
The company has also announced that it has removed 170 million pieces of ‘problem plastic’ for supermarkets and online retailers from circulation. After launching its Now and Next Sustainability Strategy last September, one of the goals it added was to remove one billion pieces of ‘problem plastics’ from supermarket shelves by 2025. Thus it has eliminated an average of more than two million pieces of single-use plastic a week from its products and packaging to reach this goal. It has the long-term goal of making all its packaging recyclable or reusable by 2030 for which it has invested £100 million ($132 million) through its Circular Economy research and development programme.
Should You Buy SMDS Shares?
DS Smith provides certain signs that make it the perfect shares for buying for the long term. It has experienced a structural shift in its favour as it services the thriving e-commerce sector, which has received an unexpected boost during the past year. This uptrend is expected to continue into the long-term as well as the relatively short-term which is backed by the company’s own forecasts.
However, there are some risks to that forecast due to the rising inflation. The company has entered into long-term agreements with suppliers, hedged energy costs and passed on higher prices to end customers to mitigate the cost challenge. This may well work in the company’s favour in the long-term. However, investors should keep an eye out on how the company is progressing instead of buying its shares at this moment.
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