Shares digital

High street retail firm WH Smith (SMWH) is believed to be ready to launch a large share buyback programme. The company is due to unveil how it performed over Christmas in a trading update next Thursday (31 January) and Nick Bubb, retail analyst at Pali International, believes that an announcement on buying back chunks of its own stock could be revealed alongside encouraging news on festive trading.

Bubb also thinks that the company is ripe to be broken up, and reckons moves along this route could be announced by the end of the year. He believes that the auction of BAA owned World Duty Free will underline the value of airport assets – Smith’s fastest growing business.

The CEO Kate Swann is well incentivised to increase earnings and improve the share price, and buybacks should do both.

Shares says: At 306p the shares are selling on a PE of 10.3 falling to 9.5. A defensive investment in the sector with good EPS prospects.

by: John Marshall

The writer holds shares in this company