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Rethink Ricardo rating

RESULTS: Ricardo's bulging order book and double-digit growth force us to reverse last year's downgrade
February 28, 2014

With a record order book in place, Ricardo (RCDO) is rightly looking forward to the second half, when the engineering consultancy typically does almost two-thirds of its business. But it had a strong first half, too. Even when you strip out the £1.3m gain from the AEA acquisition in 2012, pre-tax profit grew 11 per cent to £8m.

IC TIP: Buy at 735p

Ten per cent revenue growth at the technical consulting division, which includes environmental consultancy AEA, drove underlying operating profit up by almost a fifth to £5.6m. A pair of big motorcycle programmes in Germany and extra work with the big American car manufacturers should help the second half. Ricardo's £143m order book is full of work from Japan and China, too. "There's a lot of scooter activity," says chief executive Dave Shemmans.

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