Diploma (LON:DPLM) has three divisions: i) life sciences: making measuring kits and other items for the healthcare and environmental industries; ii) seals: gaskets, cylinders and industrial machinery and iii) controls: specialist wires, connectors and fasteners. It is headquartered in London, but most of its operations are in North America and continental Europe. Interactive Investor produced a video on on DPLM recently, in which it cheekily referred to its trading activities as "a random business" collection, and an "old-fashioned British combine dating back to 1931 that's seen more restructurings than Joan River's face". Don't let that put you off, though, as they wind up by saying that the stock still looks good value and shows long-term potential.
Recent update
DPLM (Diploma) has issued a nice half-yearly report this week. Note that a trading statement was made back in March, so the market knew what to expect in this report. Comparing 6 m/e 31 March 2011 to 6 m/e 31 March 2010, revenues are up 31%, operating profits are up 51%, and operating margins are up, too. Interim dividends are up 25%. Improvements were noted in all three divisions. Shareholders can be very pleased with that result. Net debt is £1m, compared with a net cash position at the finals stage of £30m. The group spent £27m acquiring businesses and £11m in dividends during the period. The balance sheet remains strong. The directors report a confident outlook, and expect that the strong performance in H1 will continue in H2, although comparatives are becoming tougher.
What the bulletin boards are saying
Richard Beddard shared his thoughts on 9 May:
- Looks like a superior business that will continue to earn high returns
- It has performed well in a recession because most sales have come from consumablesits products are specialised, so it isn't easy for customers to switch
- While some companies remain competitive for decades; most succumb to competitive pressure sooner. The odds are against Diploma
Ultimately, he doesn't like the price at 2.5X BV and 27X 10-year average earnings, based on a share price of about 274p at around that time. The shares currently stand at 360p, giving it a market cap of £411m.
Discussion on DPLM is rather thin, but one bullish investor noted the following at the end of December 2010:
As a long term Diploma Investor…
