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Ricardo continues to broaden its capabilities

The high-tech engineering consultancy continues to expand its offering - and order book - across a range of end-markets
February 28, 2017

Ricardo (RCDO) moved into the second half of its financial year with a record order book, complete with an 11 per cent increase in order intake at £181m. Adjusted pre-tax profit and revenue were both up 4 per cent, disregarding the effects of acquisitions and non-recurring income linked to R&D credits.

IC TIP: Buy at 918p

Although the Sussex-based engineering consultancy continues to diversify its corporate profile through acquisitions, the eye is drawn to its high-end automotive work with the likes of McLaren. Increased volumes there helped the performance products division increase underlying profit by 13 per cent during the period to £3.4m. But the group, partly through targeted acquisition, now applies its technical nous across a range of applications, including rail electrification, environmental schemes, integrated urban planning and management of water resources.

Performance at the larger technical consulting division initially suffered in Europe, due to low order intake during the first quarter, but ended the half ahead, and saw strong orders in the rail business. Ricardo also got the nod from the United Kingdom Accreditation Service to provide certified assurance services for the global rail sector.

Investec expects adjusted pre-tax profit of £38.3m and adjusted EPS of 55.1p for the June 2017 year-end, against £37.7m and 54.7p in 2016.

RICARDO (RCDO)
ORD PRICE:918pMARKET VALUE:£488m
TOUCH:906-918p12-MONTH HIGH:1,040pLOW: 645p
DIVIDEND YIELD:2.0%PE RATIO:19
NET ASSET VALUE:260p*NET DEBT:34%

Half-year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201515813.219.25.07
201616712.117.75.42
% change+6-8-8+7

Ex-div: 9 Mar

Payment: 6 Apr

*Includes intangible assets of £96m, or 180p a share