reports
- Denise Molina
Morningstar | SMGZY Updated Forecasts and Estimates from 10 Jul 2019
Our key takeaways from Smiths Group's first-half results are that broadly, the businesses are tracking in line with expectations, at 2% revenue growth with some margin softness from temporary regulatory issues. Medical and detection's growth this year will be back-end loaded as expected. Management's guidance is for at least 2% underlying revenue growth. We are sticking to our 4% growth forecast. However, we suspect greater margin pressure on both of those businesses than we previously thought. ...
- Denise Molina
Morningstar | SMGZY Updated Forecasts and Estimates from 08 Jul 2019
Our key takeaways from Smiths Group's first-half results are that broadly, the businesses are tracking in line with expectations, at 2% revenue growth with some margin softness from temporary regulatory issues. Medical and detection's growth this year will be back-end loaded as expected. Management's guidance is for at least 2% underlying revenue growth. We are sticking to our 4% growth forecast. However, we suspect greater margin pressure on both of those businesses than we previously thought. ...
- Denise Molina
Morningstar | Smiths Group Fires on Some but Not All Cylinders in 1H; ...
Our key takeaways from Smiths Group's first-half results are that broadly, the businesses are tracking in line with expectations, at 2% revenue growth with some margin softness from temporary regulatory issues. Medical and detection's growth this year will be back-end loaded as expected. Management's guidance is for at least 2% underlying revenue growth. We are sticking to our 4% growth forecast. However, we suspect greater margin pressure on both of those businesses than we previously thought. ...
- Denise Molina
Smiths Group Fires on Some but Not All Cylinders in 1H; Shares Attract...
Our key takeaways from Smiths Group's first-half results are that broadly, the businesses are tracking in line with expectations, at 2% revenue growth with some margin softness from temporary regulatory issues. Medical and detection's growth this year will be back-end loaded as expected. Management's guidance is for at least 2% underlying revenue growth. We are sticking to our 4% growth forecast. However, we suspect greater margin pressure on both of those businesses than we previously thought. ...
- Denise Molina
Morningstar | Smiths Group Announces Welcome Separation of Medical Div...
Smiths Group's announcement of the separation of its medical division solves one of the three issues that have been weighing on the stock: the uncertain long-term strategic direction for the medical division, recent declines in the medical division's revenue, and the detection division's loss of market share with port customers. Details are still murky, but we take the medical division's separation news as a welcome solution to the strategic question, as it was the division with the greatest lon...
- Denise Molina
Smiths Group Announces Welcome Separation of Medical Division; Shares ...
Smiths Group's announcement of the separation of its medical division solves one of the three issues that have been weighing on the stock: the uncertain long-term strategic direction for the medical division, recent declines in the medical division's revenue, and the detection division's loss of market share with port customers. Details are still murky, but we take the medical division's separation news as a welcome solution to the strategic question, as it was the division with the greatest lon...
- Denise Molina
Morningstar | Smiths Group is well positioned as a leading player in n...
We think Smiths Group is well positioned as a leading player in niche markets. Its John Crane mechanical seal division provides a base of high-margin, recurring revenue, while Smiths Detection offers good growth opportunities. We also see potential for improving returns in the next couple of years.Global security screening is likely to see robust growth, with demand for detection devices extending beyond traditional locations, such as airports and borders, to more general public venues. Smiths D...
- Denise Molina
Smiths Group is well positioned as a leading player in niche markets.
Smiths Group's fiscal-year 2018 free cash flow came in 13% below our expectations, despite working capital improvements, with roughly one third of the miss due to currency changes and the rest from restructuring and pension related costs. Excluding these temporary pressures, revenue grew 2% and the underlying operating margin was stable. We are maintaining our medium-term forecasts for 4% and 7%, revenue and earnings growth, respectively, as well as our GBX 1,810 fair value estimate and narrow m...
- Denise Molina
Morningstar | Smiths Group Noisy 2018 Results; Shares Attractive
Smiths Group's fiscal-year 2018 free cash flow came in 13% below our expectations, despite working capital improvements, with roughly one third of the miss due to currency changes and the rest from restructuring and pension related costs. Excluding these temporary pressures, revenue grew 2% and the underlying operating margin was stable. We are maintaining our medium-term forecasts for 4% and 7%, revenue and earnings growth, respectively, as well as our GBX 1,810 fair value estimate and narrow m...
- Denise Molina
Smiths Group Noisy 2018 Results; Shares Attractive
Smiths Group's fiscal-year 2018 free cash flow came in 13% below our expectations, despite working capital improvements, with roughly one third of the miss due to currency changes and the rest from restructuring and pension related costs. Excluding these temporary pressures, revenue grew 2% and the underlying operating margin was stable. We are maintaining our medium-term forecasts for 4% and 7%, revenue and earnings growth, respectively, as well as our GBX 1,810 fair value estimate and narrow m...
- Denise Molina
Morningstar | SMGZY Updated Star Rating from 18 Jul 2018
We would take advantage of the share price weakness in narrow-moat Smiths Group following the company's profit warning due to extra costs in its medical division (28% of revenue). The costs are related primarily to regulatory changes, but also to changes in distribution. In total, we believe the extra costs will be around GBP 25 million per year, with about GBP 15 million regulation-related, from fiscal 2018 to fiscal 2020. This lowers our EBIT in those years by 4%-5% per year; however, as the e...
- Denise Molina
Morningstar | Regulatory Costs Lower Near-Term Profits for Smiths, but...
We would take advantage of the share price weakness in narrow-moat Smiths Group following the company's profit warning due to extra costs in its medical division (28% of revenue). The costs are related primarily to regulatory changes, but also to changes in distribution. In total, we believe the extra costs will be around GBP 25 million per year, with about GBP 15 million regulation-related, from fiscal 2018 to fiscal 2020. This lowers our EBIT in those years by 4%-5% per year; however, as the e...
- Denise Molina
Regulatory Costs Lower Near-Term Profits for Smiths, but Not Enough to...
We would take advantage of the share price weakness in narrow-moat Smiths Group following the company's profit warning due to extra costs in its medical division (28% of revenue). The costs are related primarily to regulatory changes, but also to changes in distribution. In total, we believe the extra costs will be around GBP 25 million per year, with about GBP 15 million regulation-related, from fiscal 2018 to fiscal 2020. This lowers our EBIT in those years by 4%-5% per year; however, as the e...
- Denise Molina
Smiths Group is well positioned as a leading player in niche markets.
Smiths Group reported a mixed set of results in the first half with a 1% group level organic revenue decline and an underlying 51-basis-point EBIT margin contraction, after adjusting for adverse exchange rates. After analysing the results, we attribute the margin decline mainly to restructuring costs from noncore businesses (39 basis points of the decline) and increased research and development spend (10 basis points of the decline), with some positive offsets from increased service revenue. S...
- Denise Molina
Lumpy Orders in Ports Slows Down Smiths Group First Half; Demand From ...
Smiths Group reported a mixed set of results in the first half with a 1% group level organic revenue decline and an underlying 51-basis-point EBIT margin contraction, after adjusting for adverse exchange rates. After analysing the results, we attribute the margin decline mainly to restructuring costs from noncore businesses (39 basis points of the decline) and increased research and development spend (10 basis points of the decline), with some positive offsets from increased service revenue. S...
- Denise Molina
Smiths Group is well positioned as a leading player in niche markets.
The market's negative reaction to Smiths' full-year 2017 results is overdone, in our view, given that the full benefits for the Morpho acquisition will be more visible in 2018 and John Crane is a late-cycle beneficiary to the stabilisation in the oil price relative to recent years. We would advise taking advantage of the recent weakness in the share price. We anticipate making less than a 5% change to our fair value estimate on the back of the results, and we maintain our narrow moat rating. Wh...
- Denise Molina
Smiths Group is well positioned as a leading player in niche markets.
The market's negative reaction to Smiths' full-year 2017 results is overdone, in our view, given that the full benefits for the Morpho acquisition will be more visible in 2018 and John Crane is a late-cycle beneficiary to the stabilisation in the oil price relative to recent years. We would advise taking advantage of the recent weakness in the share price. We anticipate making less than a 5% change to our fair value estimate on the back of the results, and we maintain our narrow moat rating. Wh...
- Denise Molina
Smiths' Weakness Post Results Overdone; Detection and John Crane Shoul...
The market's negative reaction to Smiths' full-year 2017 results is overdone, in our view, given that the full benefits for the Morpho acquisition will be more visible in 2018 and John Crane is a late-cycle beneficiary to the stabilisation in the oil price relative to recent years. We would advise taking advantage of the recent weakness in the share price. We anticipate making less than a 5% change to our fair value estimate on the back of the results, and we maintain our narrow moat rating. Wh...
- Denise Molina
Order Pace Picking Up for Smiths' Hold Baggage Screening Equipment; Sh...
Since Smiths Group closed its Morpho Detection acquisition in April, it has announced four major contracts for computed tomography hold baggage screening, evidence of an acceleration in equipment orders that we think will continue for the next couple of years. The company recently announced a second contract with Gatwick Airport in the United Kingdom, just a couple of months after the first order, bringing the airport's total order to 20 pieces scheduled to be installed in 2018. While Smiths...
- Denise Molina
Detection Is the Star of a Rather Unimpressive Revenue Performance in ...
Except for its security screening equipment, or Detection, business, Smiths Group got off to a rocky first half of the year in terms of demand, with flat revenue year over year. Â Group profitability improved as a result of cost-cutting measures, with a 130-basis-point improvement in operating margins to 17.1%, resulting in an 8% increase in normalised EBIT. We are not changing our fair value estimate, as we expect growth in Detection to continue delivering in the second half and for demand to p...
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