Churchill China to smash forecasts again

Rarely has Churchill China had it so good. Certainly shareholders will never have felt richer in all of the Stoke-on-Trent potter's 220-year history.

Shares in the tableware manufacturer have just rocketed as much as 14% to 850p, an all-time high, following yet another profits beat. Churchill has made a habit of this in recent years, and explains why the shares are up more than fivefold since 2009.

"Trading in the second half year has been ahead of earlier expectations, with the levels of growth achieved in the first six months of 2015 being sustained in the second half year," said the firm Friday. "The board now expects that operating performance will be ahead of current market estimates and well ahead of 2014."

We'll get confirmation when the company publishes results for 2015 on 24 March.

But none of this actually surprises us. We've said before that a mix of strong brand, overseas prospects, cash pile, and earnings momentum underpin the investment case.

(Click to enlarge)

We highlighted the shares in May last year as part of a feature Nine AIM shares to buy and keep forever. We looked at conservative companies which had been around for decades, even centuries, and which could be around long after we're gone.

The shares were worth 575p then, but were not obviously cheap on a forward price/earnings (PE) ratio of 17.2 times. Still, our AIM expert Andrew Hore pointed out in November that sometimes investors must pay for performance.

In his article 8 expensive AIM shares still worth buying, Andrew covered some of the best examples of better-performing highly-rated companies. Churchill China made the list, having nearly doubled its earnings per share over five years.

House broker N+1 Singer remains upbeat: "We see fair value above 800p, and wouldurge small-cap investors to take a much closer look at this increasingly successful UK manufacturing company with a strong consumer and international angle".

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.