Good morning! Welcome to Tuesday's report.
The Agenda is complete.
Companies Reporting
| Name (Mkt Cap) | RNS | Summary | Our view (Author) |
|---|---|---|---|
Vodafone (LON:VOD) (£18.0bn) | FY25 guidance achieved. Outlook: broad-based momentum, top-line growth in Germany. | AMBER (Megan) Not a bad set of numbers from the enormous telecoms company. Most notable is the newly rebased dividend which is just about covered by free cash flow. And the significant reduction in debt is also a reason to keep me on the neutral side. | |
Fresnillo (LON:FRES) (£7.6bn) | More business-friendly environment in Mexico. Positive outlook for gold and silver prices. | ||
Smiths (LON:SMIN) (£6.9bn) | Q3 organic revenue +10.6%, YTD +9.6%. Expects top end of 6-8% guidance with margin expansion. | ||
| Diploma (LON:DPLM) (£5.7bn) | Interim Results | H1 revs +14% to £729m, adj op profit +25% to £156.9m. FY25 guidance upgraded. | AMBER/GREEN (Roland) Today’s half-year results look strong and include a 2% upgrade to FY revenue guidance, with higher margins than previously expected. This distribution group is an excellent business, in my view, with an impressive record of long-term compound growth. Value hunters should shop elsewhere, but I’m quite comfortable taking a moderately positive view here. |
Londonmetric Property (LON:LMP) (£4.0bn) | Like-for-like income growth 4.2%. Total return 8.3%. EPRA net tangible assets per share 199.2p. | ||
Cranswick (LON:CWK) (£2.9bn) | Like-for-like revenue +6.8%. ROCE 18.5%. The start of the current year is in line. | AMBER/GREEN (Graham) Differing with my colleagues and taking a positive view here, while acknowledging that the shares aren't "cheap" and that the recent allegations against a particular farm were deeply troubling. | |
Greggs (LON:GRG) (£2.0bn) | First 20 weeks: sales +7.4%, LfL +2.9%. Expectations for the full year outcome remain unchanged. | GREEN (Megan) There are two numbers which stand out for me this morning: +2.9% LfL sales growth (higher than at the end of last year) and a marketing video with 3.1m views on TikTok. The wind seems to be back in Greggs’ shares, so I am going back to uninhibited positivity about this stock. | |
SSP (LON:SSPG) (£1.3bn) | LfL sales +5%. Operating profit +20% (£45m). H1 in line, full year guidance maintained. | ||
Hilton Food (LON:HFG) (£807m) | Trading in line and outlook in line (adj. PBT £76.8 - 81.0m). | ||
Senior (LON:SNR) (£675m) | Two contracts from land vehicle manufacturers: €200m over 8 years. Strong recent momentum. | ||
Forterra (LON:FORT) (£402m) | Rev +22%. Improving demand environment. Leverage multiple reduces to 1.7x (Dec 2024: 1.9x). | AMBER/GREEN (Roland) Government data show UK brick despatches rising by 17% in Q1. Forterra says its performance is consistent with this backdrop. After investing in its facilities during the downturn, I think there’s scope for profit upgrades in 25/26 if the sector recovery continues. | |
Fintel (LON:FNTL) (£302m) | Trading in line. | ||
FDM (Holdings) (LON:FDM) (£273m) | Q1 trading was in line. Macro uncertainty continues. Hesitancy amongst some customers. | ||
Luceco (LON:LUCE) (£239m) | Q1 revenue +19%, adj. Operating profit +8%. Confident outlook, full year expectations unchanged. | AMBER/GREEN (Graham) Downgrading this one notch, despite an in-line update, as the company's share price has increased while both its quality metrics and its overall StockRank have declined. As I don't think companies in Luceco's sector ought to trade on above-average earnings multiples, I'm more comfortable with AMBER/GREEN than GREEN. | |
Riverstone Energy (LON:RSE) (£187m) | Board and investment manager have agreed in principle key terms of a managed wind-down. | ||
Knights group (LON:KGH) (£146m) | Revenue +8%, adj. PBT +11% (£28m). Acquisitions integrating well. Confident of further growth. | AMBER/GREEN (Graham) I can leave this Super Stock with an AMBER/GREEN status even though personally I tend to be wary of debt-fuelled acquisitions in the legal and professional services sectors. As Roland noted recently, the cheap forward earnings multiple is likely to conceal some large adjusting items. The interim results had actual PBT of £9m vs “underlying” PBT of £14.6m. In the context of heavy adjustments and a large debt load, and the sector, it makes sense to me that this should trade on a cheap earnings multiple. | |
| Renold (LON:RNO) (£123m) | Statement Regarding Possible Offer | SP +34% Two separate offers from different private equity groups. One of them is at 77p, the other at 81p. “Each follows several previous proposals”. Renold’s Board are providing both private equity firms with access to management and to due diligence information | PINK The provision of special access to management for the potential bidders suggests to me that there is a strong likelihood (though by no means a guarantee) of a recommended offer. Roland was AMBER/GREEN on this stock last month, noting that “it looks perennially cheap, but does have cyclical exposure and costly pension schemes.” That will be yet another profitable small-cap swept off AIM. |
EKF Diagnostics Holdings (LON:EKF) (£112m) | 2025 YTD trading in line with exps. Cash £15.7m at 9 May. FY25 adj EBITDA to be in line. | ||
Trufin (LON:TRU) (£89m) | SP +7% to 89p | AMBER/GREEN (Roland) [no section below] | |
Topps Tiles (LON:TPT) (£66m) | H1 sales +4.1%, adj PBT +3.2% to £3.2m. “Strong start” to H2, adj sales +9.5%, LFL +6.2%. | ||
Calnex Solutions (LON:CLX) (£44m) | Revs +13% to £18.4m, PBT £720k. Net cash £10.9m. 2H25 stronger, FY26 outlook in line. | AMBER/RED (Roland) [no section below] | |
Cyanconnode Holdings (LON:CYAN) (£30m) | Terms: 7%/5yr. For working capital & loan repayment. Conversion price to be at “fair market value”. | ||
Getbusy (LON:GETB) (£24m | ARR up 6% to £21.3m (30 Apr). Board “encouraged” and confirms revenue exps for 2025. | ||
Atome (LON:ATOM) (£19m) | New renewable power business in LatAm. 400MW solar/battery project under review in Paraguay. | ||
OptiBiotix Health (LON:OPTI) (£18m) | TwinSlim Tomato Soup launched in Hong Kong with NASDAQ-listed partner NHT. USA launch shortly. | ||
Zinc Media (LON:ZIN) (£15m) | Documentary for client in Saudi Arabia. YTD booked revenue now £30m, ahead of prior year. | ||
Poolbeg Pharma (LON:POLB) (£14m) | Cash £7.8, FY op loss £(6.4)m. Positive preclinical data. Launched £4.1m placing & £100k retail offer. | ||
IXICO (LON:IXI) (£8.3m) | Revs +26% to £3.2m, Op loss £(0.9)m. £5m cash. Order book £13.1m. 2025 trading in line. | ||
Xeros Technology (LON:XSG) (£7m) | Revenue of £0.2m, adj EBITDA loss of £4.4m. Cashflow breakeven “in sight” in 2025. | ||
Newmark Security (LON:NWT) (£6.8m) | FY25 revenue to be at least £23m (+3%), “slight growth” in adj EBITDA. Strategic focus on HCM. | ||
Hardide (LON:HDD) (£5.3m) | Revs +32% to £2.8m, EBITDA +0.4m. Positive free cash flow. On track for full year expectations. | ||
Comptoir (LON:COM) (£3.8m) | Revs +10% to £34.6m (+2% LFL), adj EBITDA £0.8m, net loss of £1.9m. Q1 2025 in line with exps. |
Graham's Section
Luceco (LON:LUCE)
Up 3% to 153p (£246m) - Q1 Trading Update - Graham - AMBER/GREEN
Luceco plc ("Luceco" or the "Group"), the supplier of wiring accessories, EV chargers, LED lighting, and portable power products, is pleased to provide the following update for the three months ended 31 March 2025 ("Q1 2025" or the "quarter") ahead of its Annual General Meeting later today.
I maintained our positive stance on this when it published full-year results in March (share price at the time: 143p).
However, I note that it has lost its Super Stock status since then, dropping back to Neutral.
Among other things, it seems that the company’s Quality metrics deteriorated as a consequence of those results.
Quality metrics now:
The quality metrics previously were ROC 15.5%, ROE 20.9% and op margin 10.3%.
I did note in March that acquisition-related costs had held back growth in Luceco’s statutory profits. It’s the statutory profits (not adjusted profits) that go into ROC and ROE.
Here are the key points from today’s short trading update:
Strong demand for Luceco’s products continued into Q1 2025.
Revenue +19% (£61m), boosted by acquisitions.
Adjusted operating profit +8%.
Leverage (net debt/EBITDA) is 1.7x, within the target range of 1-2x. Net debt was £69m at the full-year results.
Outlook:
While key industry metrics are mixed we are seeing an improving trend, spend on home improvement activity has been increasing in the UK.
The evolving macro environment suggests we should maintain our cautious stance, and accordingly the Board's full year expectations remain unchanged.
Minimal impact is expected from tariffs.
Graham’s view
I’m going to downgrade this one notch today, which might seem harsh given that today’s update is both confident and in-line.
However, this is not a stock that I personally have a great deal of conviction in - and it now has both a slightly higher share price, and lower quality metrics, than it did previously.
Zooming out to a 3-year chart, we see that it has run into resistance around the current levels many times before:
Wiring accessories, LED lighting and portable power are not product categories that I would instinctively think of as high-quality sectors. All of them could be considered cyclical. And so it’s difficult for me to imagine that the company deserves a P/E multiple much higher than the current level (11x), particularly when we take its debt load into account.
That said, the stock does still offer several of the attractions mentioned here before, such as strong cash flow generation, confident outlook statements, and (until recently at least) market share gains. Long-term holders will no doubt be reassured by today’s update.
AMBER/GREEN seems reasonable to me.
Cranswick (LON:CWK)
Up 5% to £55.25 (£2.99bn) - Preliminary Results - Graham - AMBER/GREEN
Cranswick plc ("Cranswick" or "the Company" or "the Group"), a leading UK food producer, today announces its audited preliminary results for the 52 weeks ended 29 March 2025.
Cranswick made headlines for the wrong reasons recently, when the Daily Mail published deeply concerning allegations of mistreatment at a Cranswick pig farm in Lincolnshire.
Operations at that firm were abruptly suspended by the company, as they instigated “an urgent and thorough investigation”.
Today’s full-year results have provided Cranswick with an opportunity to update further on this issue.
While Northmoor Farm isn’t specifically mentioned, they do say (emphasis added):
We have always placed the highest importance on animal health and wellbeing and continuously aim to have the most stringent standards in the sector. We take seriously any instance, anywhere in our supply chain, where behaviour fails to meet those standards. We are therefore instigating a new, fully independent, expert veterinarian review of all our existing animal welfare policies, together with a comprehensive review of our livestock operations across the UK. We will provide a further update on this work in due course.
Putting this issue to one side for now, let’s get into Cranswick’s full-year results.
Key points:
Like-for-like revenue +6.4% (total revenue £2.7bn)
Adjusted PBT +14.3% (£197.9m), and I note that this above the range of market expectations published in March (£190-195.1m)..
ROCE unchanged at 18.5%
Revenue growth has been driven by volume growth of 7.7%.
And full marks to Cranswick for once again a) emphasising the importance of its ROCE, and b) continuing to generate an excellent return, as measured by this KPI.
Stockopedia’s calculations don’t come up with exactly the same number but they do still find that Cranswick is above-average:
CEO comment excerpt:
"This year we have made significant strategic and financial progress delivering record revenue and adjusted profit before tax. We have also continued to make substantial investment across our industry leading asset base, our farming operations and in acquisitions to support our long-term growth ambitions.
The company is still showing growth ambitions with £138m of capex on their “pipeline of earnings enhancing major capital projects”.
Pig production is up 14% year-on-year.
In terms of M&A, the company made a £24m pig genetics acquisition last year, and has recently paid £32m for a sausage manufacturer.
Outlook snippet:
Thanks to our strategic investments and the unwavering dedication of our teams across the organisation, we are in a stronger position than ever to deliver on the Group's strategy. The start to the current financial year has been in line with the Board's expectations…
Graham’s view
To me, Cranswick offers a highly attractive combination of growth and discipline.
Their share count has barely moved over the years, while profits have compounded and multiplied several-fold. I believe this is because when they invest for growth, they are doing so in a measured and calculated way, without taking excessive risk on any one speculative venture.
For example, if you review the capex projects and acquisitions in today’s report, the largest single project had a cost of only £62m - not large compared to the overall value of the business. And that project is a multi-phased expansion of a pork processing site, where I think we can have a lot of confidence that they will generate a solid return on this investment.
Megan recently reported on their capital markets day. I acknowledge that some of the medium-term targets may not seem very exciting, such as “mid single digit organic revenue growth”.
However, that is before the impact of M&A, where the company has a proven ability to add value using acquisitions.
For me, the key point is that they are targeting “upper teens ROCE, increased from mid-teens”. When you have a company that is expanding and growing and continuing to generate upper teens ROCE as it does so, you have the recipe for a great investment. Which of course is something that Cranswick has proven to be over the years.
Perhaps I’m a little biased because I’ve had good experiences investing in this one historically (on behalf of others). I tend to think of it as a long term winner and as one of the best mid-cap stocks on the market.
I’m therefore going to differ with the views of my colleagues and give this an AMBER/GREEN, to reflect my very positive view on the business offset by a) the admittedly high valuation at which it trades, and b) the recent allegations and negative publicity, which could still cause some issues. My expectation is that to the extent that Cranswick has animal welfare issues, it is very unlikely that they are worse than the industry as a whole. On the contrary, given its responsibility as a major national food supplier to supermarkets, I would hope and expect that its animal welfare standards are better than the industry average.
In conclusion: from a big picture point of view, I do think it makes sense to be moderately positive on a High Flyer that has just posted profits that are ahead of market expectations. That’s what High Flyers tend to do, and it’s one of the things that makes them a successful investment style. It seems to me that Cranswick is a business that is often underestimated.
Megan's Section
Greggs (LON:GRG)
Up 7% to 2147p (£2.2bn) - Trading statement - GREEN
The best number in Greggs’ trading statement (covering the first 20 weeks of 2025) is the 2.9% increase in like-for-like sales. The fast food group has halted the decline in the pace of like-for-like growth which had been a disappointing feature of the last three announcements. Total sales in the period (which includes the contribution of new stores) rose 7.4% to £784m.
As ever, I have visited my own quota of Greggs stores in the period under review, including two stores new to me. The formula is consistent wherever you go (although those buying their sandwiches in Whitechapel, Peckham or Ilford will soon have to go to the counter as the company switches up the format in an attempt to stamp out shoplifting). It’s that consistency which has made Greggs so popular as it continues to push boundaries of its northern roots and sweep the country. In the first 20 weeks of the year, the company opened 66 new shops to take the total up to 2,638. The ambition (which management is confident in achieving) is to have opened a net of between 140 and 150 stores by the end of the year.
On a like-for-like basis, management attributes the return to more meaningful growth to product innovation. That includes a range of iced drinks and some more healthy options. But the most notable product expansion is in hot food, which is where Greggs finds itself in more direct competition with the world’s biggest fast food company, McDonald’s. In terms of UK numbers, Greggs remains the leader (McDonald’s has 1250 UK restaurants).
I’d argue that it’s not really product innovation but the company’s truly spectacular marketing efforts which have enabled the company’s nationwide growth. After all, a Greggs sausage roll is just a sausage roll in taste, but in culture it is so much more than a sausage roll following the company’s efforts on social media. The same is true of its recently launched mac & cheese which is tasty, but no different to a mac & cheese I’ve had anywhere else. And yet the recent video announcing its launch was watched over 3 million times on TikTok.
Management doesn’t split out the cost of marketing, but distribution expenses are a major chunk of the costs (not reported in these numbers). Operating margins have hovered around the 10% mark for the last few years, which isn’t bad for a retailer, but this is where McDonald’s will always take the crown. Its franchise model means operating margins have averaged 42% in the last five years. Greggs has a few franchises, but owns the majority of its stores.
Megan’s view:
I make no secret of my position as a fully invested fan of Greggs - it’s a brilliant business. But I have wavered in its suitability as a great investment in recent months as like-for-like store growth has been declining. The company arguably had a couple of profit warnings in 2024, only saved from using the dreaded words because of its lack of clear forecasts. Profit warnings are a red flag for growth stocks.
But 2025 seems to have started off better and the tide has started turning on the share price trajectory as well - up 17% in the last month. A forward price to earnings ratio of 15x is not bad value for such a high quality company, especially considering the downward trajectory of earnings forecasts also seems to have come to a halt. Consensus earnings were upgraded just a fraction in May and there could be more upgrades on the table. I’m going back to GREEN.
Vodafone (LON:VOD)
Unch. at 72.6p (£18.0bn) - Final results - Megan - AMBER
Vodafone is neither a straightforward nor an especially interesting company to analyse. This morning’s financial results statement is 51 pages long and it includes the ‘key’ profit metric EBITDAaL, which is disturbingly over-adjusted. What matters to investors is the dividend (and how well covered it is), the debt (and how expensive it is) and if there are any costly events on the horizon which could impact either of those two features.
Chief executive Margherita Della Valle insists that in the last two years “Vodafone has changed”, but I am not seeing anything meaningfully different here. Sales are up 2% to €37bn (about €5bn lower than sales reported a decade ago). German sales fell, UK sales rose and both of these performances were also reflected in the dreaded EBITDAaL figure (which is earnings before interest, tax, depreciation, amortisation and leases). After discounting the excessive adjustments, the company reported an operating loss after taking a €4.5bn impairment in its German and Romanian divisions.
There’s still tinkering going on in which markets Vodafone operates in. Spain and Italy (which were admittedly, costly and underperforming) have gone, the debt-laden telecoms towers business was spun out a few years ago and later this year, Vodafone UK will merge with Three to make a mega mobile provider, "committed to the rollout of 5G in the UK”.
But back to what matters to investors.
Dividend at more sustainable levels (just)
This time last year, Vodafone cut its dividend in half from two interim payouts of 4.5¢ to two interim payouts of 2.25¢. The second chunk of that will be payable on 1 August for shareholders on the register before 6 June.
The total cash cost of the dividend in this financial year was €1.8bn, down from €2.4bn in FY24, and just about covered by an unadjusted free cash inflow of €1.85bn. It should be noted that this year’s payout did include the last chunk paid at the higher level, but it’s not great that the cover was so tight even after such a big dividend cut last year.
Cash costs are dominated by the whopping capital expenditure (€6.9bn) required to maintain and build the assets of such a huge telecoms company. They also include the ever present expenditure on mobile network spectrum and licences (which management continues to inexplicably discount from its adjusted free cash flow figure) as well as €246m on restructuring.
On a reported basis, the loss per share was 15.9¢, owing to those impairment charges. But the dividend was well covered by adjusted earnings of 7.9¢. There is no specific comment on the payout for FY26, but it looks like the dividend will be maintained at the current levels as management continues to steady the ship with “an ambition to grow it over time”.
Based on a FY26 dividend of 4.5¢ (equivalent to 3.79p based on this morning’s exchange rate), the dividend is yielding 5.2%.
Shareholders do also benefit from the buyback scheme which was extended by another €2bn this morning, following the completion of the acquisition of €2bn worth of shares in the last two years.
Debt under control
Gross gearing slipped below the 100% mark last year, taking the company’s debt out of the ‘red flag’ zone for the first time in many years. After a €4.1bn and €7.9bn cash inflow from the sales of Vodafone Spain and Italy respectively, net debt fell to €22.4bn. That’s below the bottom range target for the company’s leverage policy of 2.25x to 2.75x EBITDAaL.
The interest paid on that debt is still painfully high, costing the company €1.9bn in 2025, but that’s down from €2.6bn last year.
Megan’s view:
Despite my over-riding feeling that this is still the slow growth, debt-laden Vodafone of old, Margherita Della Valle has done a good job at doing what she promised when she climbed the ladder from CFO to CEO. Debt is manageable, the dividend is in a more comfortable position and the deadwood has been trimmed.
So now what?
Roland sees Africa as a potentially interesting growth market for the company (you can read his analysis in the daily report from February) and the merger with Three is also a good opportunity. But I don’t think we should expect this enormous utility provider to ever be a ‘growth’ company. Instead investors should continue to hope for reasonable dividends. I’m staying neutral. AMBER
Roland's Section
Forterra (LON:FORT)
Unch at 190p (£402m) - AGM Trading Update - Roland - AMBER/GREEN
Trading saw continued positive momentum with the Group benefitting from an improving demand environment, primarily driven by housebuilding with RM&I demand remaining subdued.
The key element of today’s AGM update from brickmaker Forterra is that demand may be recovering in this highly cyclical market:
Revenue during the four months to 30 April rose by 22% to £124m
Government data show UK brick shipments +17% YTD versus last year
Forterra says its own performance is consistent with this backdrop
The company says that demand from housebuilders is strengthening, although RM&I (repair, maintenance & improvement) remains “subdued”.
The company is pushing through price increases to offset cost inflation, preserving its margins. Forterra says its inventories are now falling and it is taking steps to manage production to ensure it can continue to meet demand:
We have recently taken steps to increase our production of concrete floor beams, and we are preparing to increase our brick production at Desford and expect to utilise both kilns simultaneously for the first time from Q4 2025.
Like some peers, Forterra has been using the slowdown to invest in upgrading its production capacity. This includes £30m of investment at the Wilnecote brick factory and a new brick slip production facility at Accrington. Both are expected to begin production shortly.
Financial update: net debt was £88m or 1.7 times EBITDA at the end of April, down from 1.9x at the end of 2024. I would prefer to see this figure slightly lower, but if trading continues to improve then I think that rising profits could negate this concern.
Brickmaking is a capital-intensive business with high fixed costs. As a result, companies see large profit swings due to operating leverage. Forterra’s operating profit fell from £75m in 2022 to £34m last year, but if demand and utilisation continues to improve, this slump could reverse.
Outlook & Estimates: the company has left full-year expectations unchanged today, warning that comparatives versus 2024 will “become more challenging” during the latter part of this year.
However, in a new note this morning, (paid research) broker Progressive suggests that current forecasts could be conservative, with scope for upgrades later this year.
I agree with this view, despite the possible macroeconomic risk to the outlook.
Current consensus forecasts put Forterra on a P/E of 19 for 2025, falling to a P/E of 14 in 2026.
While these ratios aren’t obviously cheap for a capital-intensive manufacturer, I think there’s scope for a more significant recovery in profits if the cyclical recovery continues.
Diploma (LON:DPLM)
Up 16% at 4,922p (£6.6bn) - Interim Results - Roland - AMBER/GREEN
Despite the uncertain environment I feel confident in our ability to deliver on our upgraded guidance this year.
Diploma is a distribution specialist supplying specialist industrial components and value-added services to customers in the US, Europe and Australia. It’s a business I’ve admired for some time, but failed to find the opportunity to buy – perhaps my mistake:
H1 2025 half-year summary: today’s interim results look strong to me and include an upgrade to full-year guidance. Here are the main numbers:
Revenue +14% to £728.5m (+9% organic growth)
Adj operating profit +25% to £156.9m
Free cash flow +21% to £83.8m
Adj EPS +23% to 80.2p
ROATCE (adjusted ROCE): 19.1% (H1 24: 18.0%)
Diploma’s model is to use regular small acquisitions to enhance organic growth and allow it to expand into new markets and deliver long-term compound growth. The difference between organic and total revenue growth in H1 is representative of this – since 2019, Diploma has spent £1.3bn on 42 acquisitions, giving an average cost of c.£31m.
This model – paired with excellent management in my view – has allowed Diploma to increase its adjusted earnings per share by an average of 16% per annum for the last 15 years – an outstanding record.
Operations are grouped into three operating segments, which delivered varied results in H1:
The Controls business is dominated by the Windy City Wire unit and is benefiting from “structural tailwinds” in areas such as building automation and data centres.
Conditions were tougher for Seals, where management says trading conditions for its Seals division are “challenging”, albeit with “pockets of growth” in North America. Improved international sales performance in seals is “still to come”, although Diploma has been investing to support growth.
The company expects a limited impact from US tariffs due to its use of local supply chains. That seems to be a claim we’re hearing from quite a few industrial companies at the moment. It may be interesting to see which of them is truly unaffected by tariffs in a couple of years’ time!
Outlook: CEO Johnny Thomson warns of an uncertain macro-economic environment but says H1 trading has left him sufficiently confident to upgrade full-year guidance for the year. Happily this is provided in a very clear format:
Therefore, despite the uncertain environment, we are upgrading our FY25 guidance to 8% organic growth (up from 6%), 2% net acquisition growth (unchanged), and c.22% adjusted operating margins (up from c.21%).
I don’t have access to broker notes for Diploma, but my estimates suggest this guidance could equate to the following change in expectations:
Revenue: £1,499m (previously consensus £1,465m)
Adjusted operating profit: £330m (previously £309m)
Adjusted EPS: 169p (previously 160.7p)
My estimate puts Diploma on a 2025E P/E of 29 after this morning’s share price gains.
Roland’s view
Diploma always tends to look expensive, but the company’s track record suggests it may deserve a premium valuation. While quality metrics are not quite high enough for a true high-quality business, they are still very good, especially considering their long-term consistency and the group’s healthy balance sheet:
However, I can’t ignore the extremely low value score here, especially as Diploma’s quality and momentum ranks are only moderately high:
For this reason, I’m going to hold back from taking a fully positive view and go AMBER/GREEN today.
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