Sometimes the best way to judge a company is to observe how it responds to adversity. Exova (EXO), whose laboratory testing helps to extend the asset life and reliability of industrial applications, achieved this goal admirably in its 2016 financial year.
Strip out restructuring costs and the £6.1m-worth of gains it made from selling three businesses, and the group's pre-tax profit for the year rose 8 per cent to £44m. Investors, mindful of weak capital spending in key oil and gas and industrial industries, responded by bidding the shares up 2 per cent.
Management tackled a prolonged lack of revenue from high-margin oil and gas and industrial sectors by reining in costs and attracting customers with similar requirements in other niche markets. By focusing more on higher-value areas such as fire testing and product and process certification, the group's adjusted operating profit margin remained largely intact, narrowing by a respectable 50 basis points to 15.3 per cent.
Analysts at Investec are forecasting adjusted full-year pre-tax profit of £43.1m, giving EPS of 12.6p, against £43.5m and 12.9p in 2016.
EXOVA (EXO) | ||||
---|---|---|---|---|
ORD PRICE: | 217p | MARKET VALUE: | £544m | |
TOUCH: | 210-219p | 12-MONTH HIGH: | 215p | LOW: 127p |
DIVIDEND YIELD: | 1.6% | PE RATIO: | 21 | |
NET ASSET VALUE: | 135p* | NET DEBT: | 43% |
Year to Dec 31 | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
---|---|---|---|---|
2012 | 254 | -24.2 | na | nil |
2013 | 279 | -25.6 | -810 | nil |
2014 | 275 | -23.7 | -16.6 | 2.0 |
2015 | 297 | 23.2 | 6.8 | 3.2 |
2016 | 329 | 36.6 | 10.5 | 3.4 |
% change | +11 | +58 | +54 | +6 |
Ex-div: 25 May Payment: 9 Jun *Includes intangible assets of £432m, or 173p a share |