Next Tuesday will see the Wythenshawe, Manchester-based Renold (LON:RNO), hold its AGM – which should also see a Trading Update being issued ahead of the meeting.
It is an engineering group delivering engineering products and solutions, manufacturing and selling power transmission and conveyor chain, as well as selling torque transmission products.
I am a big fan of this £114m-capitalised company, reckoning that its shares at just 57p are too conservatively rated.
The Business
With an unsurpassed reputation for innovation, design and manufacturing skill, Renold is the world’s leading manufacturer of industrial transmission chains, gearboxes and couplings
Tackling thousands of demanding operating environments, its ranges are specified for use in power transmission, lifting, conveying and processing applications on a global basis.
The group has operations in some 20 countries and an international network of distribution partners.
Its market-leading products can be seen in diverse applications from cement making to chocolate manufacturing, subway trains to power stations, escalators to quarries; in fact, anywhere something needs to be lifted, moved, rotated or conveyed.
Performance
In the last five years, to end-March, its group revenues have risen from £189.4m to £241.4m in 2024.
In the same period its pre-tax profits have more than quadrupled from £4.9m to £22.9m, while its earnings have risen from 2.9p to 7.8p per share.
In the mid-July Final Results announcement CEO Robert Purcell informed shareholders that:
“I am pleased that the Group continued to perform strongly throughout the year reflecting the hard work, strategically, commercially and operationally that has been undertaken over recent years by our employees across the world.
The business is now at an inflection point where we are starting to see the compounding impact of the many recent exciting initiatives as they come to fruition.
We have a very clear strategy and are executing it diligently.
Our continuous improvement initiatives are building an increasingly efficient, productive and resilient business and are providing an ever improving platform to support our commercial initiatives.”
Analyst View
At Cavendish Capital Markets, analyst David Buxton increased his Price Objective from 65p to 75p for the group’s shares.
His current year estimates, to end-March 2025, are for revenues of £243.2m and £22.8m of adjusted pre-tax profits, generating earnings of 7.1p and paying a 0.5p dividend per share.
Looking forward to the 2026 year he sees £248.5m sales, £23.8m profits, 7.3p earnings and maintaining its 0.5p dividend.
His 2025 end-year net-debt could drop from £24.9m to £20.1m, leading on to a significant reduction in the 2026 year to £10.9m net-debt.
In My View
I am looking forward to next Tuesday’s AGM Trading Update to help to spark some interest in this undervalued, but quality group.
Its shares have been up to 66.80p in the last year and as low as 26.50p.
Now at 57.50p, I consider that they are capable of a notable price rise very soon.