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Halma PLC HLMA

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Halma: Full-Year Guidance Might Be Conservative Following Solid Trading Update

Matthew Donen

We maintain our GBX 2,600 for narrow-moat Halma after reviewing its first-half trading update. First-half order intake is up year over year and growing ahead of revenue, which is underpinning "good" organic revenue growth, although no figures were provided. Full-year guidance of good organic revenue growth and adjusted EBIT margin of around 21% was unchanged. We think its EBIT margin guidance could be on the conservative side, given modest margin improvement during the first half. Shares currently screen as fairly valued.

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Price vs Fair Value

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HLMA is trading at a 662% premium.
Price
GBX 2,655.00
Fair Value
GBX 3,642.00
Uncertainty
Medium
1-Star Price
GBX 8,351.00
5-Star Price
GBX 1,728.00
Economic Moat
Yskwfg
Capital Allocation
Nvnrmbqjx

Bulls Say, Bears Say

Bulls

Most of the group’s markets are underpinned by regulation, which drives maintained demand throughout the cycle and thus greater resilience than many other industrial businesses.

Bears

The retirement of Andrew Williams as CEO after 18 years in the role introduces uncertainty over the new leadership team's ability to deliver consistent shareholder value through acquisitions.

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Trading Information

Previous Close Price
—
Day Range
—–—
52-Week Range
—–—
Bid/Ask
— / —
Market Cap
—
Volume/Avg
— / —

Key Statistics

Price/Earnings (Normalized)
30.88
Price/Sales
4.94
Dividend Yield (Trailing)
0.81%
Dividend Yield (Forward)
0.81%
Total Yield
1.02%

Company Profile

Halma consists of 45 operating businesses managed in a decentralized manner. The company, through its products, focuses on trying to make the world safer, cleaner and healthier. The group operates across three segments: safety, environmental and analysis, and medical equipment. Halma’s products include smoke detectors, healthcare equipment, door sensors, and water treatment. Most of the group’s products are niche with limited competition. Over 75% of sales are generated in the United States, Europe and United Kingdom. Halma is listed on the London Stock Exchange.
Sector
Industrials
Industry
Conglomerates
Stock Style Box
Mid Growth
Total Number of Employees
8,000
Website
https://www.halma.com

Competitors

Valuation

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Metric
HLMA
AFX
CSU
Price/Earnings (Normalized)
 30.8831.7846.49
Price/Book Value
 5.773.0327.31
Price/Sales
 4.943.067.32
Price/Cash Flow
 26.9119.4935.77
Price/Earnings
HLMA
AFX
CSU

Financial Strength

Metric
HLMA
AFX
CSU
Quick Ratio
 1.552.340.82
Current Ratio
 2.453.510.90
Interest Coverage
 12.3912.083.76
Quick Ratio
HLMA
AFX
CSU

Profitability

Metric
HLMA
AFX
CSU
Return on Assets (Normalized)
 10.85%—3.42%
Return on Equity (Normalized)
 18.71%—18.83%
Return on Invested Capital (Normalized)
 13.63%—8.21%
Return on Assets
HLMA
AFX
CSU

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