Bit of a turnaround in today's update. Clearly higher crude prices are now coming through to the equipment suppliers - slightly surprising that the previous announcement was so cautious. As ever ROR stands on a premium rating, but even at this price the immediate future looks good. Will continue to hold.
Profits rise and the share price falls. Looking behind the headlines these are disappointing results. No major growth story here for 2018. With the currency headwinds it is even worse than it looks. Good company well run but at this price it is not attractive. I will see where the share price drops to and look at buying back in probably around 235 as things stand.
"The superior returns of small cap stocks versus large caps have been well documented on these pages over recent years, supported by evidence going back over two decades.But can this outperformance continue in the face of rising interest rates, ..."
"Cyclical swings in demand for oil and gas make it difficult for companies who operate in this volatile industry. A slump in prices from $116 a barrel to a low of less than $29 not only hurt producers, but also suppliers like LSE:ROR:Rotork who ..."
It looks all fairly tidy in that the website is already showing Peter France as having disappeared without trace from the board, and giving all the details of his severance terms (fascinating!). It looks all to have been planned in advance which must be some comfort to shareholders ... of which I am not one, but I have long wanted to own this excellent company which has always, thus far, seemed to be too expensive.
Mind you, when one looks at the cost savings which the likes of Shell have been making in their op costs, one realises the squeeze that ROR and others must be suffering.
Tried to understand the real reason for Peter France's sudden resignation from reading the press release but did not succeed as the press release just calls for more investment in product innovation, customer service and efficiencies which I wouldn't think would normally trigger a CEO resignation. I hope the resignation is because the board want to change strategy a bit and reduce exposure to the oil and gas sector. This is still a solidly profitable business with fairly low debt so I am happy to hold and await developments but I do think that some strategic changes may be needed to reflect the company's changing markets.
"If you need proof that there are always opportunities in challenging markets, look no further than LSE:ROR:Rotork. Thanks to foreign exchange tailwinds and well-timed acquisitions, revenue at the valve control systems firm should reach the top ..."
"Credit Suisse initiated coverage of Rotork and Weir at 'outperform' as it took a look at the pan-European capital goods sector.
The bank gave Rotork a 230p price target. "We see Rotork as a high-quality company and while we do not discount a recovery in end markets, we see continued support for earnings from ongoing acquisitions and FX."
In addition, the bank said it sees scope for continued consolidation in Process Automation, adding that Rotork is in an attractive asset given its relatively high market shares in niche markets.
CS started Weir with a 1,800p price target. The bank said its positive view was based on the potential for earnings upgrades driven by US onshore oil & gas and FX.
"On valuation we think stability in the mining business provides support and the shares are not pricing in a demanding recovery for O&G."
CS pointed out that Weir has historically correlated well with the rig count, where its US team forecasts 28% growth in 2017.
It also said Weir has broad currency exposures and is most leveraged to the US, Canadian and Australian dollars, which have strengthened materially.
Credit Suisse started coverage of IMI at 'neutral' with a 1,020p price target. It said that given the company's historical below-sector average organic growth of 1.5% in 2007-15, the focus on investment in IT and improving time to market /customer service is reassuring.
"However, in 2017 we see limited recovery in end markets, high-margin businesses (Critical aftermarket) under pressure and against that backdrop we expect 2017 to represent a transition year."
Industrial valve specialist Rotork saw its shares slide more than 4% after broker Morgan Stanley downgraded the companys outlook and warned capital spending in the oil sector will come under further pressure. The gloomy research note said that we may have only just begun to see the cuts in spending from the oil majors, as more pain is expected in the year ahead. The Bath-based engineering group manufactures high pressure valves that are mainly used in the oil and gas industry. The company generates about two thirds of its profit from valves used to control flow rates in the oil and gas refining process, with the remaining third largely coming from valves on pipelines and small gears and instruments businesses.
The engineer showed a 28% drop in pretax profits to £102 million when it reported results for the year to the end of December last month. Market consensus is for full-year pretax profits to remain flat at £102 million in the year ahead, on revenue down 4% to £526 million, giving forecast earnings per share of about 9p. However, that may prove optimistic as the oil price slump has resulted in a slowdown in the order intake, down by 15% on a year earlier. Rotork is not standing still and is using this opportunity to expand, spending £148 million on acquisitions throughout the year, the largest deal being £125 million for Bifold, a valve manufacturer and distributor.
We recommended selling in October last year at 186.4p, and until there is a meaningful recovery in the oil and gas sector we retain our negative stance.
Good set of results, the market were expecting worse I think. Their strategy looks right for these market condictions. We are seeing a number of corrections now where there has been overselling of certain stocks in this sector. Upside happening now for holders in the sector.
Agree there is nothing wrong with the company. I bought many actuators from them when involved in the water industry and was so impressed with their performance that I bought their shares which have quadrupled in value. There R and D is impressive also. I guess the drop in sp I just down to global recession and uncertainty but there's an argument for sellling and re- purchasing later if you can time it right.
I've sold all my individual shares and placed my was with a manager now.
Yes, in retrospect that would have been a good idea but I don't think anyone is suggesting that there is anything fundamentally wrong with the company, it's just that some of its markets are depressed. I am happy to hold on for better times as the company will have no problem surviving the downturn.
Industrial valve specialist Rotork saw its shares slide more than 4% as a brief recovery following the September profit warning ran out of steam. Questor still thinks the shares look exposed to further losses. The Bath-based engineering group manufactures high pressure valves that are mainly used in the oil and gas industry. The company generates about two thirds of its profit from valves used to control flow rates in the oil and gas refining process, with the remaining third of profit largely coming from valves on pipelines and small gears and instruments businesses. Meanwhile, the oil price slump has resulted in a slowdown in the total group order intake, down by 9.5% to £274 million in the first half. As work on projects outpaced replacement orders, the order book declined by 4.3% to £176 million.
Questor was concerned that investors looked exposed to a slowdown when we advised selling at £28.13 (281p adjusted for share issue) in August last year. Rotork is a quality company that has invested in its technology and manufacturing capacity, but the shares have priced this in and more.
H-L informs me that Rotork shares have been sub divided, I now own ten times as many. Unfortunately each is worth a tenth of previous value. Is this just an administrative thing or something more sinister?
There does not appear to be any change in the fundamental strengths of the company and I expect the profit margins will still be excellent when the next set of results are announced. I think the main concern for investors is the recent share price performance rather than the company's performance and, for me, share price volatility is not a reason to sell.
"LSE:ROR:RotorkÂ has been one of the stockmarket's most reliable engineers for at least the past decade, possibly longer. It makes pneumatic and hydraulic valve actuators for the oil and gas industry, and control systems used in power stations. But ..."
SP still lagging the FTSE100 so I'm still swithering. There was a real buying opportunity in Feb but these are easy to see in hindsight. Hoping for another special to make holding worthwhile. I've got a lot of these and some sources are recommending a switch out of equities altogether.
Ingenious, Did you do the analysis back in April?
Just started looking at this -- maybe the hiatus in the share price is a blessing in disguise, it's probably run ahead of itself and is recouping some reality.
Having said that, this company is pretty much debt free and continues to grow it's underlying revenue and profit. No disgrace in an otherwise challenging market for many companies in engineering.
I kick myself for not being more aware of this in the past.
We should bear in mind that most stocks are heavily traded on spikes, especially after a big retrace over many months. Investors are selling out at any chance they get, for fear of losing after waiting so long.
Ultimately, the sp drags on and on, or actually goes in reverse....... may take longer to achieve full potential(sp) as it is heavily traded off on the spikes...there is some evidence of shorters(traders) forming groups to deramp the sp down....they may be some of your 'regulars'........However, i still believe this is a BUY at current levels
...What's going on ?
Many stocks have good fundamentals and bags of potential, yet they are going down, even on good news ........
I think something more sinister is going on, along with hundreds of other stocks? Ever wondered why some AIM stocks go DOWN on GOOD NEWS?
.Update: Campaign to make short selling illegal:
# Thanks to all those that have supported this campaign #
IT is estimated that over 90% of AIM stocks are INFECTED by short-sellers !
Many highly popular stocks are going down even on GOOD NEWS !
# IF you were a short-seller, BLUFFING, (basically manipulating a shares' price) about a company's overvalued share price, you might not want to *draw attention to yourself since you could get accused of stock manipulation. So you would hope (OR PLAN FOR) others to get involved and to present SEEMINGLY GOOD REASONS to short the stock.
You would want to put AS MUCH FEAR INTO 'LONGS' as possible and would use high volume short trading as well as buying to drive the share price down as low as you can and as long as you can. You really want the longs to fold and to get out of the game. If you are consistently seeing sellers overwhelming buyers driving a share price down as a stock seems to be going up, I can assure you it's probably shorts' selling, since longs are totally motivated to sell their shares at the highest possible selling price. #
I've held Rotork for several years during which the sp has risen by 610% and i like to invest in dynamic, innovative companies who 'make stuff'. However over the last year the sp has dropped significantly against the ftse 100 and the basic divi is not good enough to compensate. Although there may be another 'special'. I'm going to do a thorough examination of the annual accounts and reports but at the moment it seems Rotork is no longer an automatic 'hold'.
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