I’ll admit it, I’ve not paid much attention to the Intertek (LSE: ITRK) share price. The last time I looked closely was in October last year, alerted to its presece by a sharp 9% drop. I wondered then if that was the buying opportunity. Turns out it wasn’t.
Back then, I reminded myself of the FTSE 100 group’s strengths. The global quality assurance provider quietly gets on with the job of testing, inspecting and certifying products. It’s been around for more than 130 years, employs 44,000 people in 100 countries, and is deeply tied into the global economy.
That does make it a cyclical. When companies are expanding, Intertek thrives. During downturns, it can feel the squeeze. Last October, I wasn’t convinced. Despite a solid performance, the shares kept drifting lower. It didn’t look like much of a bargain, either, trading at 21.2 times earnings.
I didn’t miss much. Over the past 12 months, the share price has fallen 8%. Over five years, it’s also down 8%. And it’s down 7.89% this morning as I write this, the biggest faller on the FTSE 100.
Forgotten FTSE 100 stock?
Today’s 2025 half-year results were poorly received, despite CEO André Lacroix praising a “strong performance”. Yet there were some pretty positive numbers here.
Revenue rose 4.5% at constant currency to £1.67bn, helped by strong growth in consumer products and corporate assurance. However, growth fell to just 0.2% at actual currency rates.
Adjusted operating profit climbed 9.7% to £276.3m at constant currency rates (falling to 4.2% at actual rates). Earnings per share jumped 12.6% (4.2% actual). Adverse foreign exchange shifts are a theme of these results. They were a real drag on earnings.
Cash conversion of 118% was described as “excellent”, while the group delivered £266m in operating cash flow.
Margins climbed from 15.9% to 16.5%, return on invested capital rose 170 basis points to 22.5%, and the board hiked the interim dividend 6.3% to 57.3p. The group’s £350m share buyback is well under way, with £187m spent so far. None of that prevented the sell-off.
Growth hit by currency shifts
Intertek remains exposed to global trade volumes at a bumpy time for the world’s economy. Also, today’s results landed as Donald Trump revived his tariff threats, and that may explain why markets reacted so badly.
Valuation may also be an issue. The shares still trade on a price-to-earnings ratio just over 20. That’s a lot lower than the 30 I saw when first monitoring the stock four years ago, but still far from bargain territory. Thanks to poor share price performance, the trailing yield has climbed to 3.44%, and management policy looks progressive.
Analysts remain optimistic. The average one-year target is 5,705p, suggesting potential gains of almost 25% from today. That forecast was made before this latest slide though, and might prove overly ambitious.
Intertek is a high-quality business. It has reliable cash flow, decent margins and long-term relevance. The market response seems harsh. I think it’s worth keeping an eye on after this drop. But there are other FTSE 100 stocks that excite me a lot more today.
