Interactive Investor

Tristel's upgrade cycle has further to run

28th July 2014 14:14

Lee Wild from interactive investor

Tristel is the envy of most companies, not just because its disinfectants keep hospitals, laboratories and vet surgeries germ-free, but because it's just announced its fifth profits upgrade inside 12 months. And earnings are growing so fast, who'd bet against a sixth?

A 9% jump in revenue during the second half to just over £7 million takes the full-year total of £13.5 million, up 28% on the year before. That should generate annual pre-tax profit of £1.8 million compared with just £500,000 in 2013, giving adjusted earnings per share of 3.2p.

Only last month, the company said rising sales in all three divisions and across most of its geographical markets would mean profit of at least £1.75 million. Margins improved and costs were stable, too.

"The company ended its financial year in good shape," says boss Paul Swinney. "The improved performance achieved over the past twelve months relates to all areas of the group and is expected to continue into the new financial year and beyond."

And that's encouraging. Broker finncap already expects adjusted pre-tax profit of £2.3 million in 2015 and adjusted earnings per share (EPS) of 4.2p, up almost a third on this year's number, which will be confirmed on 13 October. That's largely in line with opinion at Equity Development.

Tristel is also sitting on net cash of £2.59 million, worth 6.4p per share. Strip that out and the shares - which have tripled to 74p since October - trade on just 16 times forecast earnings for 2015. With EPS growth tipped to average about 24% over the next two years, that multiple looks good value, especially as even the City admits that its conservative estimates look vulnerable.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.