Seasoned investors know that the market can be a fickle beast at the best of times yet it seems to be in a particularly capricious mood about full year results from Halma (HLMA).
Having closed yesterday at £14.22, the company’s share price shot-up nearly 4% in early trading today, hitting £14.70. Since then the stock performance has ebbed away so that it is actually down 12p on the overnight close, at £14.10.
Halma is the FTSE 100 health, safety and environmental technology group that has earned a copper-bottomed reputation for unerring progress. As today’s results announcement makes oh so clear, this is the firm’s 15th consecutive year of revenue and profits growth, setting new records on both measures.
Pre-tax profit increased 9% to £171.9m in the year to 31 March 2018, on £1.076bn in revenue, up 12%. This is the first time it has broken the £1bn sales barrier.
GROWTH EVERYWHERE
Growth came across the board - the UK, US, Asia, Europe with its Environmental Analysis business leading the way with 15% growth, and that’s after stripping out currency oscillations.
The business could hardly be in ruder health, encouraging management to lift the annual dividend by an inflation-busting 7% to 14.68p.
That may only imply a yield of 1% but readers should not forget the power of long-run compounding, as Shares has explained many times (see our ‘Dummies Guide to Compounding’).
True, the share price has enjoyed a strong run in the lead up to today’s announcement, rallying about 23% since the start of April. It is also worth noting the year ahead price to earnings multiple, which is now pitched at 31.7 based on 44.5p consensus earnings per share forecasts.
But in spite of these factors today’s market reaction seems a bit odd, and not just to us.
‘Halma had some unusual activity with shares initially bouncing after the company reported record profit and sales for the full year but then slipping into the red,’ says Fiona Cincotta, City Index’s senior market analyst this morning.
