It’s not often that a FTSE 250 share triples in the space of just one year. Yet, incredibly, that’s what Goodwin (LSE:GDWN) has done. It has risen by around 200%!
That beats Rolls-Royce (105% in a year) and Nvidia (45%), as well as every other stock in the FTSE 250 index. Investors who bought in just over a week ago are already almost 50% to the good!
What has caused this massive spike? And is it too late for me to invest?
What Goodwin does
First, a little bit of info on this family-run company, as it’s not a household name despite being founded by Ralph Goodwin all the way back in 1883. It specialises in mechanical and refractory engineering (refractory relates to components that don’t melt under extremely high temperatures). So we’re talking castings, valves, pumps, that sort of thing.
Goodwin’s end markets are worldwide and diverse, ranging from mining to nuclear and defence. The last two probably pricked up a few ears, as these are sectors that governments are really throwing money at right now.
In defence, Goodwin makes specialised components for military jet engines and naval programmes. And last month it entered into an agreement with Northrop Grumman to supply components for four key defence programmes. Starting with an initial $16m, orders are expected to rise above $200m over time.
Eye-popping profit upgrade
On 27 October, Goodwin released a trading update with two incredible pieces of news for shareholders. The first was that for the year ending 30 April 2026, management expects pre-tax trading profit to exceed £71m, which would be a 100% increase.
The order book stood at £365m, but the firm had “enhanced visibility across multiple key defence and nuclear programmes that are not yet reflected in the order book“. It said all divisions contributed to performance.
To reward shareholders, the board declared a special dividend of 532p. This was in addition to the 140p dividend per share paid earlier this month, and the forthcoming 140p payment in April 2026. So shareholders are being showered with surplus cash lately.
The special dividend will be paid around 21 November, just before Rachel Reeves’ Budget (where dividends might be targeted).
A final thing to note is that Goodwin’s balance sheet is in very good nick, with almost zero net debt.
Will I buy the stock?
While the firm looks perfectly placed to pick up more contracts in the booming defence and nuclear markets, there are some risks. The first is that it’s exposed to global supply chain disruption, as well as potential cost inflation. All engineering and defence firms are having to navigate these challenges right now.
Also, after its massive run, the stock looks pricey. The trailing price-to earnings ratio is 60. Even though that multiple will come down with profits surging, it’s still quite high. And the ordinary dividend yield is low at 1.4%.
As such, it’s hard not to conclude that I’ve missed most of the action here. So I won’t be investing right now. But with promising opportunities in defence and nuclear, it’s definitely a high-quality stock worth keeping an eye on.
Goodwin serves as a great reminder that there are still very lucrative opportunities around for UK investors. We just have to find them!
