Bathroom fit-out specialist Norcros (NXR), the firm behind the Triton brand of showers, is riding high this morning. The shares are up 6.4% to 212.7p on a strong set of full year results, which reveal a ninth consecutive year of growth.

Revenue in the company’s two main market, the UK and South Africa, is up 10% and 12% respectively as the company benefits from a mix of acquisitive and organic growth. The dividend is hiked 8.3% to 7.8p.

The company has recently pursued a strategy of broadening its bathroom offering in order to provide a full suite of products.

The full year performance is impressive given both markets have uncertain consumer backdrops. Numis analyst Christen Hjorth notes the UK outcome ‘represents a robust performance against a challenging backdrop.

'In our view, this result reflects management actions over the last five years to refocus the group away from the DIY end market into higher growth areas (e.g. trade, specification, housebuilding, etc.)’.

He also cites the strong performance of the South African business over the last five years as mitigation against any risks from a difficult economic environment there.


Hjorth, who reiterates his ‘buy’ recommendation and 300p price target, reckons the shares are ‘significantly undervalued’. At current levels the shares trade on a multiple of 6.8 times his March 2019 earnings forecast.

‘Furthermore, given the group’s robust balance sheet (FY20 net debt/EBITDA: 0.7x) and “well developed” acquisition pipeline, we expect organic growth to be augmented by further M&A (which we do not include in our forecasts),’ he adds.

We discussed our positive view on the stock in this article. A risk which may be a factor in the company’s discounted valuation is a substantial pension liability. Though, notably, the net pension deficit actually fell in the period from £62.7m to £48m.

The company is currently in discussions over a new triennial valuation of the pension scheme.

Issue Date: 13 Jun 2018