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Renishaw - Great Company, High Price

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ADrunkenMarcus
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Renishaw - Great Company, High Price

#69979

Postby ADrunkenMarcus » July 27th, 2017, 12:39 pm

Pleasing results from Renishaw this morning for the FY 2016-17.

Return on Capital Employed 21% and Operating Margin 21.75%.

Renishaw plc and subsidiary undertakings
Preliminary announcement of results for the year ended 30th June 2017

HIGHLIGHTS

• Record revenue of £536.8m, with an underlying growth of 14%
• Strong growth in encoder, measurement and automation, calibration and coordinate measuring machine product lines in our metrology business
• Revenue growth in all healthcare product lines
• 25% increase in adjusted profit before tax
• Capital expenditure of £42.6m, providing for future growth
• Headcount increase of 244, including 91 graduates and apprentices
• Strong balance sheet, with cash of £51.9m, compared with £21.3m last year
• Dividend increased by 8.3% to 52.0p


I bought in 2011 at 869p and have enjoyed a compound annual growth rate above 30%. The dividend yield was about 4.5% when purchased but that's now down to 1.3% despite the dividend increasing over 35% since purchase. I would not initiate a new position, but will continue to hold. For long term investors, even at these prices I would expect a good result.

Best wishes

Mark.

ADrunkenMarcus
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Re: Renishaw - Great Company, High Price

#79850

Postby ADrunkenMarcus » September 8th, 2017, 9:42 am

I am beginning to wonder about the sustained rise in Renishaw's share price, in the absence of any RNS or other obvious news. Late in July, the share price had moved into the low £40s and it's now within touching distance of £48. Even on a forward basis, the dividend yield is 1.1%.

Best wishes

Mark.

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Re: Renishaw - Great Company, High Price

#80088

Postby UncleEbenezer » September 9th, 2017, 11:22 am

Damn, where were you when I seemed to be the only person on TMF's GARP board?

I don't hold Renishaw, but if you'd drawn attention to it there, who knows? Sadly viewtopic.php?f=8&t=5892 may be the only surviving record of that.

ADrunkenMarcus
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Re: Renishaw - Great Company, High Price

#80125

Postby ADrunkenMarcus » September 9th, 2017, 3:16 pm

I'm often in the wrong place!

Perhaps this explains some of it, but I abhor the short-termism!
http://www.dailymail.co.uk/money/invest ... arget.html

I want to hold it for a long time and I'd prefer progress to be made by continuing organic growth rather than the company being swallowed up and its culture threatened.

Best wishes


Mark.

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Re: Renishaw - Great Company, High Price

#80215

Postby Nocton » September 10th, 2017, 12:17 pm

I've held Renishaw for years and it has been a great investment. Apart from their heavy investment in R&D and unique products, as they manufacture mostly in the UK and export most of their output they are benefiting strongly from the weak pound. Over the years I have top-sliced so have a 'zero-cost' holding which intend to hold as they have such a good record. Don't expect them to be taken over though due to the founders' 'principles' and their large holding.

ADrunkenMarcus
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Re: Renishaw - Great Company, High Price

#80252

Postby ADrunkenMarcus » September 10th, 2017, 4:03 pm

Nocton wrote:Don't expect them to be taken over though due to the founders' 'principles' and their large holding.


I hope that they aren't taken over and I fully agree with what you've said. I've held since 2011 and expect to continue to hold. I think one concern is their age. They may be happy to carry on working for now, but that does leave a controlling share of the company in their hands and those of their heirs' which may become a factor within the next decade.

Best wishes

Mark.

XXRP
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Re: Renishaw - Great Company, High Price

#80923

Postby XXRP » September 13th, 2017, 6:52 pm

Can anyone explain why the share price is rising so fast? It has nearly doubled since January! and recently it is recording new high almost every trading day. Today Deutsche downgraded the stock to SELL but the shares closed 25p higher!

Only time I have seen this sort of price increases in the past is when the company is at an early stage of takeover talks (and they say there is insider dealings!). Renishaw has not made any statement regarging takeover talks.
The two origial owners hold a very large portion of the equity in the company; however both of then are OAPs and may be looking to get out!

Does any one know when a company is compelled to make a statement regarding share price movements thatt are not in broder index?

Regards

ADrunkenMarcus
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Re: Renishaw - Great Company, High Price

#80974

Postby ADrunkenMarcus » September 13th, 2017, 11:58 pm

XXRP wrote:Can anyone explain why the share price is rising so fast? It has nearly doubled since January! and recently it is recording new high almost every trading day. Today Deutsche downgraded the stock to SELL but the shares closed 25p higher!


I am wondering very much the same! Today the share price touched 5030p, which means the dividend yield is only about 1% on a forward basis.

It is very hard to get a handle on earnings. If I remember rightly, the last year's earnings were estimated at 120p as per the 'consensus' but they actually came in at 132p. I assume estimates are being revised up steadily, but who knows? I don't think a 10% boost to earnings would account for all the recent rise. Moreover, given how much Renishaw exports then the rising Pound in the past few days should have been a drag. Even if last year's earnings rose an improbable 50% then, at 5030p, the share price is indicating a forward PE of 25.

I would not want Renishaw bought out. I want to hold long term. I lost Domino Printing Sciences to a takeover in 2015.

Best wishes

Mark.

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Re: Renishaw - Great Company, High Price

#81051

Postby AleisterCrowley » September 14th, 2017, 11:42 am

I certainly hope Renishaw isn't bought out. A friend of mine at Poly worked for them (mid 1980s) - possibly still does, as his names on a patent application from 2012! Visited the Mill HQ at Wotton-under-Edge and it seemed to be a very good place to work. There was some concern at the time re patent cover for products and possibilities of being undercut by far east 'copies' but as I say that was 1980s and they seem to be thriving.

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Re: Renishaw - Great Company, High Price

#81107

Postby XXRP » September 14th, 2017, 3:58 pm

Today the price is 4906p down 2.17%
The pound angaint the dollar is up 1.21%

Total revenues = £536.8m
UK revenues = £27.6m
Overseas revenues = £509.2m

Company uses forward hedging for foreign contracts.
Revenue and profits are not always directly in same proportions.
Without much more digging, and allowing for the £/$ change, there appears to be approx 1% drop in share price today.

I will wait and see what happens over the next few trading days - unless someone knows better.

PS - I do not want to see the company to be taken over, but I am here to make a profit for myself first. I don't want to sell out (or partial sell out- dreaded cap gains tax) if there is more jam tommorrow!

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Re: Renishaw - Great Company, High Price

#81847

Postby Bouleversee » September 18th, 2017, 5:15 pm

Did you read the following article on Interactive Investor, which I have only just read myself?

http://www.iii.co.uk/articles/444296/sh ... k-and-thin

I have several times over many years contemplated buying Renishaw (I think it was one of Lord (John) Lee's favourites and got a mention now and then in his FT column but either it looked too expensive or I was too busy to pursue it. What a pity! It sounds a fantastic company, just the sort of company I would like to be invested in and in fields where it is all going to be happening in the future , but it looks even more expensive now. Chewing over whether to buy some for my grandchildren; will sleep on it. I should think it is inevitable, sadly, they will be taken over by a foreign, probably Chinese, company in due course, however, as one of my other favourites, Arm Holdings, was. I wouldn't be selling if I held, but buying takes a bit more courage.

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Re: Renishaw - Great Company, High Price

#81887

Postby BobbyD » September 18th, 2017, 8:29 pm

I need reminding I hold RSW every now and then, spent a lot of time looking at it before I bought then let it get on and do its thing once I had bought. Pleasantly surprised every now and then when I notice the share price whilst looking for something else in my portfolio.

ADrunkenMarcus
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Re: Renishaw - Great Company, High Price

#81888

Postby ADrunkenMarcus » September 18th, 2017, 8:39 pm

Bouleversee wrote: I should think it is inevitable, sadly, they will be taken over by a foreign, probably Chinese, company in due course, however, as one of my other favourites, Arm Holdings, was. I wouldn't be selling if I held, but buying takes a bit more courage.


I'm holding, since 2011, but I wouldn't add at these levels. I do hope the 40+ PE provides some protection against predators: any takeover would need to be at a substantial premium to the market valuation, which is already so great.

Best wishes


Mark.

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Re: Renishaw - Great Company, High Price

#81898

Postby Bouleversee » September 18th, 2017, 9:26 pm

Can you remember what the P/E ratio was when you bought?

ADrunkenMarcus
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Re: Renishaw - Great Company, High Price

#81899

Postby ADrunkenMarcus » September 18th, 2017, 9:30 pm

Bouleversee wrote:Can you remember what the P/E ratio was when you bought?


I think it was about ten and the dividend yield was about 4.5%. The dividend has since grown at about 6+% CAGR but the dividend yield is down dramatically and recently touched 1.1%.

Best wishes

Mark.

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Re: Renishaw - Great Company, High Price

#81903

Postby Bouleversee » September 18th, 2017, 9:46 pm

Rather a different story. I cant have looked at it then. I hope you had a nice chunk in there, Mark. Another missed boat so far as I am concerned, I fear.

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Re: Renishaw - Great Company, High Price

#81919

Postby spiderbill » September 18th, 2017, 10:58 pm

One that got away for me. I had a small holding that I sold in March at 3128p at a nice 105% profit intending to swap it into an ISA in the next tax year and add a bit more. It promptly rose steeply in the intervening few days and I foolishly waited for it to drop back. It instead climbed like a rocket and has continued to do so. Kept missing the boat and now I fear it's way too late. If only I'd bought that instead of topping up Carillion!! :(

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Re: Renishaw - Great Company, High Price

#81923

Postby Bouleversee » September 18th, 2017, 11:13 pm

Carillion; don't mention that name to me. I share your pain. :(

ADrunkenMarcus
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Re: Renishaw - Great Company, High Price

#81954

Postby ADrunkenMarcus » September 19th, 2017, 7:36 am

Bouleversee wrote:Rather a different story. I cant have looked at it then. I hope you had a nice chunk in there, Mark. Another missed boat so far as I am concerned, I fear.


In hindsight I wish I'd invested a lot more, but I did invest quite a reasonable sum and the capital has increased dramatically with the share price rising from 869p to a recent high above 5000p. You could still buy under 2000p quite recently.

Best wishes

Mark.

ADrunkenMarcus
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Re: Renishaw - Great Company, High Price

#81955

Postby ADrunkenMarcus » September 19th, 2017, 7:44 am

spiderbill wrote:One that got away for me. I had a small holding that I sold in March at 3128p at a nice 105% profit intending to swap it into an ISA in the next tax year and add a bit more. It promptly rose steeply in the intervening few days and I foolishly waited for it to drop back. It instead climbed like a rocket...


The lesson here is 'Don't sell Renishaw!' I suppose the rise was just awkward timing with the tax year. I tend to give an instruction to Bed & ISA, then normally it's done the same day and you have a reasonable match between the sell and buy price, except you have fewer shares bought back after fees: so I use cash to top up the holdings back to their prior quantity and/or make any adjustments needed.

Renishaw was 2% of the capital value of my portfolio in April 2016 but it's now 3.9%, which comes despite the portfolio's capital value growing substantially.

I know someone else who sold Unilever because it was looking 'toppy' or 'expensive' (how did they phrase it?) back in February. A day or so later and it started a rise which has taken it up 40% in a few months.

Best wishes

Mark.


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