Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.
What: Shares in Renishaw (LSE: RSW) climbed more than 16% in early trade this morning, following final results from the British engineering company.
So what: Management hailed a record year for revenue, which came in at £355.5m — a 2% rise on the previous year’s figure of £346.9m, boosted by a record-breaking final quarter that brought in £107m.
Statutory pre-tax profit soared by 17% to £96.4m (2013: £82.1m), leading to basic earnings per share (EPS) flying up a hefty 27% to 118.4p. Management also raised the dividend by 3% to 41.2p per share, to please shareholders.
However, the current strong pound against this time last year caused the adjusted figures to waver, meaning that adjusted pre-tax profit was actually down 11% against FY2013, and adjusted EPS down 7%.
Now what: Still, these are strong figures; Chairman and CEO Sir David R McMurtry nodded towards the “large, unpredictable revenue… from certain Far East customers”, which brought in 11% underlying revenue growth at actual exchange rates, only narrowly behind the recovering UK’s 15% (the Americas and Europe saw underlying growth by these measures of 8% and 4%, respectively).
What we, as investors, can take away from this is that a company like Renishaw, with vast exposure to the UK — mooted to be the fastest growing major economy this year, according to the IMF — and the emerging market of China, has the potential to outpace the market substantially.
Right now, this ‘screaming BUY’ stock is trading at a steep discount from its IPO price, but it looks like the sky is the limit in the years ahead.
Because this North American company is the clear leader in its field which is estimated to be worth US$261 BILLION by 2025.
The Motley Fool UK analyst team has just published a comprehensive report that shows you exactly why we believe it has so much upside potential.
But I warn you, you’ll need to act quickly, given how fast this ‘Monster IPO’ is already moving.
Sam Robson has no position in any shares mentioned. The Motley Fool recommends Renishaw.