IDS Shares (LON: IDS) are listed on the London Stock Exchange, with the stock also a constituent of the FTSE 250 Index.
The full name of the company is International Distribution Services PLC, formerly known as Royal Mail plc, is a British company that provides postal and courier services through its two subsidiaries. The company changed its name to better reflect its structure. IDS is the holding company, which includes Royal Mail and GLS.
Royal Mail operates in the United Kingdom, while GLS operates internationally through around 40 countries and nation-states, predominantly in Europe. However, it has a growing presence in North America. Royal Mail can trace its origins back more than 500 years to 1516.
YOUR CAPITAL IS AT RISK
IDS EPS and Revenue Breakdown 2020-2023
| IDS | Annual EPS | Annual Revenue |
|---|---|---|
| 2020 | 16p | £10.84 billion |
| 2021 | 62p | £12.64 billion |
| 2022 | 61.7p | £12.71 billion |
| 2023 | -91.3p | £12.04 billion |
Postal and Courier Industry Comparison
IDS Share Price & Dividend Yield
The IDS share price has declined over the last few years, with service issues and strikes hampering the business. Industrial action by unionised staff over pay and working conditions resulted in the company reporting losses and significant pressure on the stock in 2022. While the stock has since stabilised, there are headwinds to watch out for.
IDS’s last dividend payment was in September 2022. However, the company said in its 2023/24 interim results that it expects to be able to pay a modest dividend from GLS at the end of the full year. However, Royal Mail isn’t able to fund the company’s dividend until it returns to positive cash generation.
IDS Share Price Forecast
Overall, two analysts currently have a bullish rating on IDS, with four assigning the stock a Hold rating and one a Sell rating.
In April, Deutsche Bank upgraded IDS to Hold from Sell with a new price target of 268p, up from 160p per share. The bank told investors in a research note that they see potential bids for the company following a report by the Financial Times that said IDS rejected a takeover approach by an investment group controlled by Czech billionaire Daniel Kretinsky.
Meanwhile, in January, International Distributions Services was lifted to Buy from Hold at HSBC. The bank also raised its target price for the stock to 314p from 280p per share. The bank said it now has a bullish view of the stock based on its belief that the company should be able to execute structural changes that could result in “significant financial benefits” over the coming few years.
Our View: IDS has certainly had to deal with some headwinds in recent years that have significantly pressured the stock. However, its low share price may make it attractive to value investors who believe it is able to build from here.
Stock Suitability
International Distribution Services (IDS) operates within the realm of global logistics, offering vital services in transporting goods across borders. With its established presence and expertise in international distribution, IDS presents an opportunity for investors seeking exposure to this essential sector. However, there are other factors to consider:
Investing in IDS requires a consideration of risk tolerance, as the logistics industry can be subject to various geopolitical and economic factors influencing global trade. While IDS has demonstrated resilience in navigating such challenges, prospective investors should be prepared for moderate volatility inherent in the industry.
Unlike some other companies, IDS hasn’t paid a dividend since September 2022 but plans a modest one at the end of the 2023/24 full year. For investors prioritising solid dividend payments, IDS may not be best suited. However, the fact that dividends look to be resuming is a factor to consider.
Despite the absence of recent dividends, IDS’s potential for long-term growth remains compelling. As global commerce continues to expand, IDS stands to benefit, potentially providing investors with capital appreciation over time.
Considering the recent performance of IDS shares, some investors may view the current price as undervalued, presenting an opportunity for value investors. However, thorough research and analysis is essential to evaluate IDS’s true value.
