It looks as if Mr Market is being over-sensitive to currency movements. Now that Cable has changed direction the price is back up to the previous highs, which were pretty much justified by the positive update.
Results seemed fine to me but judging by sharp fall in SP today (at 10:00 around -2.5%) market expecting better.
"All sectors have traded in line with our expectations outlined at the half year. The Environmental & Analysis sector has performed strongly, with the Process Safety, Infrastructure Safety and Medical sectors making good progress. As expected, actions to control discretionary costs are steadily improving profitability in the Medical sector and the growth rate in the Process Safety sector has moderated due to tougher prior year comparators."
Only the last bit is slightly negative but IMO does not justify -2.5% SP change. Would give it a weak BUY opinion if web site did not hide option on new posts!
Got to have a target - what else is there to aim for? CEO said a couple of years ago that the value of the parts were far greater than the whole. It may come that Halma will start to split itself apart to realize the value contained within, especially as the company has grown, acquired and matured to its present state. I tucked this one away a long time ago in an ISA or two and when (not if) it reaches £15, will be a 4 x bagger for me.
It looks to me from a very quick scan as if the CEO and the CFO sold as near as damnit all of their awarded shares, with chust a pathetic few retained for what looks like cosmetic reasons. Those are the guys whose actions speak louder than words.
Obviously there is a lot of guess work involved, but if these 2 purchases are making around 10% ROT Halma have bought them at PEs of around 20, & 9.5; against their current PE of 32. One assumes there will be synergies, so cost savings can be made; so, based on my (what do people do pencil estimates on now fag packets are less common?) finger in the air calcs, the purchases look very good value.
At least you're asking questions I can answer! Thanks.
The ii fundamentals takes a few days to be updated after results are announced. So they are showing figures based on last year's finals. I was doing my calculations based on the results announced this morning. Adjusted EPS was 40.21, so with the share price currently on 1174, that gives a PE of 29.2 (1174/40.21.) I didn't actually do that calculation this morning. I just thought price is approaching 1200 & EPS is around 40. I can do that sum,.
At the risk of teaching grandmother's to suck eggs:
The average PE of the FTSE 100 is around 15. Companies may be higher or lower for a number of reason - a large dividend may push the price higher, while a lack of dividend may reduce the price - but the main reason for varying from the norm is what is expected in the future. Businesses in trouble whose profits may be fit for whatever reason will have a lower PE. On the other hand businesses like Treatt & Halma with a very good track record of growing profits, and with every indication they are going to continue to grow profits will have a higher PE. I suppose strictly speaking people should always qualify PE by saying it is a historic PE (i.e. using the latest known EPS) or forward looking PE which will base the EPS on brokers' forecasts.
To put it another way most businesses with excellent growth prospects will appear overpriced.
If Halma continued to grow profits at 17% pa and the share price remained static from now, it would get to a PE of 15 in 4 years.
So I think it is overpriced at the moment, but with growth shares you can never be sure when they get to the overpriced level at which people seriously start selling, and jumping out too early can mean missing out on a lot of growth.
I've invested for the long term - as long as the profits continue to grow, I'll stay invested and the share price will go from being highly over priced to modestly overpriced, but the overall trajectory will continue upwards. And with the dividend growing at 7% or so each year; I'll be getting some incremental income too.
Most people would be pleased with a 7% pay rise every year.
As for using Halma equipment - you're one up on me; but one of my earliest investing lessons was when looking for companies to research why not start with ones whose products & services you like.
Not disappointed with those results! Halma seems to be on a roll at present, new highs, increased profits, increased dividend. £15 can't be too far away now.
Now, Mrs. May - this is how strong and steady looks.
"When LSE:HLMA:Halma publishes financial results, dividends get broken. It's been the case for as long as I've covered them, and this time is no different - record revenue and record profit for a 14th consecutive year, and a further ..."
Hardboy - Lk
gents as a bit of a novice I would appreciate a bit of help re Halma.
Hardboy you mention a p/e of near 30 yet in the fundamentals its near 40..
do you just ignore III fundamentals and work out the p/e yourself.
I know you shouldn't get to concerned with p/e I think last time I discussed it was re LKs favorite share Treatt.
I liked that share because of the director buys but was put off by the p/e DOH.
I actually work with Halma kit so I know it is good swag but high p/e still puts me off.
Especially with the market so high. Lets face it, if Im making money every day there must be something wrong. Reminds me of 1987.
In Halma's terms, the SP is 'shooting up' (new all time high today) - while XPP seems to be somewhat languishing after its spurt upwards. Wait until the results are announced on Jun 13th - should be steady and profitable progress with another increase in the divi - 39 years of continuous increases is no mean feat.
In my last post dated 23-03-17 I mentioned that XPP was my best performing share. Now wish I had bought more then as following today's trading statement SP rose 9.3% ! They also pay quarterly dividends. XPP make HLMA's performance appear sluggish.
Hopefully, all those who were shorting the stock at the end of last years are now seeing the error of their ways.. I could see no reason to short then and update shows that this very sound company is still progressing well.
"I wish I had invested more than [checks] 1.5% of my shrunken wad in it."
Keep the same number of shares, and with a following wind, it will become more than 1.5% of your wad; and if it doesn't that'll be because your other holdings are doing even better, so that would be even better.
I have done 3 top ups of HLMA holding since first substantial purchase in Sep 2014. Now my 8th largest share holding 3.69% of total. Feel comfortable at this level. HLMA used to be my fastest rising share but now superseded by XPP and III. REL faster riser than later purchases of HLMA at yesterdays close. HLMA will move up in ratings at today's close if it hangs to 6% rise.
Good performing shares that I have bought in the last year tend to outperform as it is hard for a share to maintain an excellent rise each year over several years.
Fully agree. what price consistency to meet expaectations over many years . Also , the large increases in EPS over time make this score holding for me (5% ). Broker target 12.50 with a 15 % increase in eps expected for '18.
A company that shares some things with HLMA in that same sector and a specialist market is XP Power Ltd (XPP). A FTSE Small Cap company specialising in high integrity power supplies. I bought a smallish value of XPP shares in September last year. I picked them out because of their good yield and overall return. Forecast yield 3.86%, forecast EPS growth 7.77%, ROCE 28%.
SP of XPP up over 7% since I bought so far so good. Apologies for off-topic.
tejo, "The sp may have got a bit ahead of itself as often happens and this is reflected in the high P/E"
The current PE is as you state high at 31.5 but the forecast PE is 23.7 which is lower than 3 year average of 25.8. If you believe analyst's forecast that is not main concern, though IMO opinion forecasts a bit optimistic. I believe it is other value indicators I mention in my previous email and the falling returns that are the real problems. Sadly I think SP will decline further but having waited too long to sell will now hold for the longer term and (fingers crossed) recovery.
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