Bottom Line: Have faith in Dowty
Friday 06 August 1993
The stock market, fully aware that the pounds 500m Dowty purchase was at least a year too soon, is now giving TI the benefit of the doubt. After a decidedly rocky start to 1993 TI shares, up another 7p to 358p yesterday, are on a chunky premium rating.
Following a 12 per cent fall in interim earnings, forecasts for the current year are around pounds 128m, which puts TI on a prospective p/e of almost 20 and a yield, in the wake of a 4 per cent half-time uplift, of 3.9 per cent.
A performance like that of Bundy and John Crane arguably deserves a premium rating. But the market is also factoring an eventual strong pick-up at Dowty.
The elusive upturn in demand for spares on existing aircraft, coupled with the potential demand from the increasing number of new aircraft carrying Dowty products, will have a big impact on profits, but maybe not until 1995 or 1996.
Meanwhile, cash flow is in the comfortingly tight grip of the finance director, Brian Walsh, who is ex-GKN. There was a slight outflow of pounds 4m in the first half but the first sale in a pounds 100m disposal programme should appear soon and take TI to its target of no net debt by the end of 1994, excluding exchange rate effects.
TI has spent pounds 19m so far on reorganising Dowty, with no visible results on the profit line, and has another pounds 20m or so to go. Margins could double at Dowty Aerospace in a couple of years and this justifies the premium rating.
- 1 Rules on 5p plastic bags likely to lead to arguments at the check-out
- 2 Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
- 3 Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
- 4 News agency criticised for describing Amal Clooney as 'actor's wife' in coverage of human rights trial
- 5 David De Gea to Real Madrid: Real finally get their man with £29m bid for Manchester United goalkeeper
Rules on 5p plastic bags likely to lead to arguments at the check-out
Watch the Supermoon live: How to see the brightest Moon of the year tonight
Hulk Hogan wants to be Donald Trump's running mate in the US Presidential election
Blood Moon and Supermoon: September to bring brightest – and dimmest – full Moon of the year on same night
Turkey duped the US, and Isis reaps rewards
Climate change: 2015 will be the hottest year on record 'by a mile', experts say
'Women only' train carriages: Jeremy Corbyn unveils radical move to tackle public harassment
Black holes are a passage to another universe, says Stephen Hawking
Iain Duncan Smith 'should resign over disability benefit death figures', says Jeremy Corbyn
Tony Blair attacks Jeremy Corbyn's 'Alice In Wonderland' politics
Theresa May says migrants should be banned from entering the UK unless they have jobs lined up
iJobs Money & Business
£25000 - £30000 per annum: Recruitment Genius: From modest beginnings the comp...
£35000 - £40000 per annum: Recruitment Genius: From modest beginnings the comp...
£15000 - £65000 per annum: Recruitment Genius: This is an exciting opportunity...
£18000 - £20000 per annum: Recruitment Genius: This is a fantastic opportunity...