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.
I can see no reason to short Halma which would appear to be an attractive company, in the right sectors, with a good growth track record. The sp may have got a bit ahead of itself as often happens and this is reflected in the high P/E. Personally, I would expect the sp to go sideways for a while until earnings rise to support the valuation.
Little chance of my limit order at 947 being met today. Because my broker company only has option for orders being cancelled at market close will be cancelled at 16:30.
Looking at fundamentals there are indications of declining value.
Price/NAV 5.4, 3 year average 4.5
Price/FCF 31.2, 3 year av 23.7
EBIT yield 3.8, 3 year av 5.6
Returns have also fallen:
ROE 18.6%, 3 year av 21.1%
ROCE 15.0%, 3 year av 19.1%
CROCI 12.0%, 3 year av 14.0%
Considering these fundamentals it is not surprising SP has fallen. Question is will they improve or deteriorate more? In all fairness they are not bad, but not as good as in the past.
Important message from the Financial Conduct Authority:
Posting inside information that is not public knowledge, or information that is false or misleading, may constitute market abuse.
This could lead to an unlimited fine and up to seven years in prison.
If you have any information, concerns or queries about market abuse, click here.
The content of the messages posted represents the opinions of the author, and does not represent the opinions of Interactive Investor Trading Limited or its affiliates and has not been approved or issued by Interactive Investor Trading Limited.
You should be aware that the other participants of the above discussion group are strangers to you and may make statements which may be misleading, deceptive or wrong.
Please remember that the value of investments or income from them may go down as well as up and that the past performance of an investment is not a guide to its performance in the future.
The discussion boards on this site are intended to be an information sharing forum and is not intended to address your particular requirements.
Whilst information provided on them can help with your investment research you need to consider carefully whether you should make (or refraining from making) investment or other decisions based on what you see without doing further research on investments you are interested in.
Participating in this forum cannot be a substitute for obtaining advice from an appropriate expert independent adviser who takes into account your circumstances and specific investment needs in selected investments that are appropriate for you.