Shares in vehicle and defence equipment manufacturer GKN (GKN) could prove a beneficiary of Britain?s weaker currency when it reports results tomorrow (Tuesday 23 February).

Full year underlying earnings per share (EPS) forecasts were upgraded by 5% to 24.2p because of currency fluctuations when analysts at RBC Capital Markets reviewed their forecasts in late January.

Sterling?s dip today, falling more than two cents against the dollar to $1.417 amid heightened uncertainty around Britain?s membership of the European Union, is helping the stock 3.2% higher at 288p in morning trading.

gkn WEB

?We like GKN?s end-market exposures and find the shares attractive despite having performed well versus UK peers recently,? writes analyst Andrew Carter in a 25 January 2016 research note.

?We expect [sterling] weakness to boost EPS and have increased our forecasts by ~5%.?

Double digit EPS growth is forecast at GKN in the next two years with forecasts of 26.7p in 2016 and 29.6p in 2017. GKN?s year-end is 31 December.

GKN has typically been seen as a value stock in the UK industrial goods sector because of the highly cyclical nature of its automotive division and a large pension deficit.

GKN is on the hook for a £1.5 deficit in its defined benefit scheme.

Another key risk is GKN?s Driveline China business. The high margin unit could be hit if the world's second-largest economy's auto market were to slow.

Consensus estimates for EPS tomorow are 26.3p, according to data from Morningstar.

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Issue Date: 22 Feb 2016