ADrunkenMarcus wrote:ADrunkenMarcus wrote:To return to 'expanding multiples', Spirax Sarco closed at 17050p on Friday - an all-time high.
There have been further upward revisions to earnings forecasts, stretching to 2023 that I can see, but it's on a p/e of about 52 vs. its three year average of 42. (I bought around a p/e of 23 in 2015). The p/e on a forward basis to 2023 is still 46. While the dividend yield on my book cost from 2015 will be a healthy 4.7% according to forecasts, someone buying today has a 0.8% dividend yield which will remain sub-1% in 2023.
Much of the 445% total return has come from multiple expansion because it trades today on 2.2 times the 2015 multiple!
It is interesting to review this a few months later. Spirax was then close to its most recent peak of 17225p a share. It's now come down to 11555p at today's close, down 33% or so even though forecasts for 2023 have edged up. Certainly a more attractive entry point.
It's even more interesting to consider this in October 2023. Spirax is down to under 8500p and the forward p/e is therefore edging under 22 for 2024. This is the same sort of valuation I bought it at in 2015, however the share price is still up 160% due to the substantial increase in profits and free cash flow per share. Dividend investors will note the dividend yield is under 2%, however that is double what it was when I last commented and this is a dividend which has been maintained or grown every year since 1965, increasing at a 11% CAGR over that period.
Kone is also looking much more attractive on a valuation perspective, as are other 'quality' growth companies I hold.
This is all the more pleasing as I may have significant new funds to add to my dividend growth portfolio in the months ahead. I suspect there is no hurry!
Best wishes
Mark.