DPLM.L – Diploma – good trading update

DPLM.L is in the "support service/industrial suppliers" sector, and has been described as "an old-fashioned British conglomerate". It operate in three segments:

  • Life Sciences – supplies to healthcare and environmental industries – consumable items and instruments for hospitals and clinics
  • Seals – supplies a range of hydraulic seals, gaskets, cylinders, components and kits used in heavy mobile machinery and specialised industrial equipment
  • Controls – specialised wiring, connectors, fasteners and control devices used in a range of technically demanding applications

Revenues are split roughly evenly between segments.

It released a trading statement today for the 6 m/e 31-Mar-2012. Highlights:

  • revenues expected to be 12% ahead on coparables, 8% after adjusting for currency effects
  • the board expects the group’s adjusted profit before tax for the y/e 30-Sep-2012 to be ahead of current market consensus

It also released notes to editors:

Diploma’s businesses are focussed on supplying essential products and services which are funded by the customers’ operating rather than their capital budgets, providing recurring income and stable revenue growth. We encourage an entrepreneurial culture in our businesses through our decentralised management structure. We want our managers to feel that they have the freedom to run their own businesses, while being able to draw on the support and resources of a larger group. These essential values ensure that decisions are made close to the customer and that the businesses are agile and responsive to changes in the market and the competitive environment.

Shares are up 4% at mid-day. Here’s some vital stats:

PIC     "DPLM" "EPIC"
NAME  "DIPLOMA" "Company name"
SECT  "SUPPORT SERVICES" "Sector"
INDEX "FTSE250" "INDEX"
PER0       14.1 "Curr PER"
PE20      11.05 "PER10 P20"
PE50      12.55 "PER10 P50"
PE80       13.8 "PER10 P80"
RREV       1.26 "REL CHANGE IN REVENUE"
OPMM       15.7 "OPM median"
YLD        3.04 "Yield (%)"
Z          7.65 "Z Score"
MKT       461.6 "MKT CAP (£m)"
ROE0       19.1 "Current ROE"
ROE10      15.7 "ROE median"
SP        407.8 "Share Price (p)"
GRATE     20.11 "Graham EPS growth rate%"
XRATE     17.22 "Exp-fit EPS growth rate%"
SREPS      0.98 "Spearman rank of EPSa"
UPD   "Last Updated: Fri 23 Mar 2012" "Updated on Sharelock"

Lots of things to like here, like good operating margins, yield, financial strength, ROE, consistent track record (look at SREPS – it’s telling you that it has had only a minor slippage in EPS growth over the last decade) . Growth rate in EPS has been excellent over the last decade. I calculate it two ways: an adapted "Ben Graham" way (GRATE), and a slightly more mathy exponential fit rate (XRATE). EPS has been growing at about 17% pa over the last decade. Not bad at all!

Its PER ratio is at the high end of its historical range, although I don’t think it is expensive on an absolute basis.

Might be a good top-up candidate for my next year’s ISA.

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About mcturra2000

Computer programmer living in Scotland.
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