LSE:SPX

Stock Analysis Report

Spirax-Sarco Engineering

Executive Summary

Spirax-Sarco Engineering plc provides engineered solutions for users of industrial and commercial steam systems, electrical heating and temperature management systems, and process fluid paths and pumping systems.

Rewards

Earnings are forecast to grow 5.81% per year

Earnings grew by 27% over the past year

Pays a reliable dividend of 1.1%

Risk Analysis

Has a high level of debt



Snowflake Analysis

Outstanding track record average dividend payer.


Similar Companies

Share Price & News

How has Spirax-Sarco Engineering's share price performed over time and what events caused price changes?


Latest Share Price and Events

Stable Share Price: SPX has not had significant price volatility in the past 3 months.


Market Performance


7 Day Return

1.6%

SPX

0.3%

GB Machinery

0.6%

GB Market


1 Year Return

41.2%

SPX

17.1%

GB Machinery

12.1%

GB Market

Return vs Industry: SPX exceeded the UK Machinery industry which returned 20.7% over the past year.

Return vs Market: SPX exceeded the UK Market which returned 12.7% over the past year.


Shareholder returns

SPXIndustryMarket
7 Day1.6%0.3%0.6%
30 Day1.7%-0.8%1.5%
90 Day22.6%18.5%8.1%
1 Year43.0%41.2%20.5%17.1%18.0%12.1%
3 Year121.7%112.4%34.1%23.8%23.9%8.1%
5 Year219.4%184.0%55.2%33.5%41.7%8.8%

Price Volatility Vs. Market

How volatile is Spirax-Sarco Engineering's share price compared to the market and industry in the last 5 years?


Simply Wall St News

Valuation

Is Spirax-Sarco Engineering undervalued compared to its fair value and its price relative to the market?

30.48x

Price to Earnings (PE) ratio


Share Price vs. Fair Value

Below Fair Value: SPX (£90.65) is trading above our estimate of fair value (£45.77)

Significantly Below Fair Value: SPX is trading above our estimate of fair value.


Price To Earnings Ratio

PE vs Industry: SPX is poor value based on its PE Ratio (30.2x) compared to the Machinery industry average (18.8x).

PE vs Market: SPX is poor value based on its PE Ratio (30.2x) compared to the UK market (18.5x).


Price to Earnings Growth Ratio

PEG Ratio: SPX is poor value based on its PEG Ratio (5.2x)


Price to Book Ratio

PB vs Industry: SPX is overvalued based on its PB Ratio (8.6x) compared to the GB Machinery industry average (1.8x).


Next Steps

Future Growth

How is Spirax-Sarco Engineering forecast to perform in the next 1 to 3 years based on estimates from 14 analysts?

5.4%

Forecasted annual earnings growth


Earnings and Revenue Growth Forecasts


Analyst Future Growth Forecasts

Earnings vs Savings Rate: SPX's forecast earnings growth (5.8% per year) is above the savings rate (0.5%).

Earnings vs Market: SPX's earnings (5.8% per year) are forecast to grow slower than the UK market (11.7% per year).

High Growth Earnings: SPX's earnings are forecast to grow, but not significantly.

Revenue vs Market: SPX's revenue (5.1% per year) is forecast to grow faster than the UK market (3.6% per year).

High Growth Revenue: SPX's revenue (5.1% per year) is forecast to grow slower than 20% per year.


Earnings per Share Growth Forecasts


Future Return on Equity

Future ROE: SPX's Return on Equity is forecast to be high in 3 years time (23.1%)


Next Steps

Past Performance

How has Spirax-Sarco Engineering performed over the past 5 years?

19.7%

Historical annual earnings growth


Earnings and Revenue History

Quality Earnings: SPX has high quality earnings.

Growing Profit Margin: SPX's current net profit margins (18.5%) are higher than last year (15.6%).


Past Earnings Growth Analysis

Earnings Trend: SPX's earnings have grown by 19.7% per year over the past 5 years.

Accelerating Growth: SPX's earnings growth over the past year (27%) exceeds its 5-year average (19.7% per year).

Earnings vs Industry: SPX earnings growth over the past year (27%) exceeded the Machinery industry 3%.


Return on Equity

High ROE: SPX's Return on Equity (28.5%) is considered high.


Return on Assets


Return on Capital Employed


Next Steps

Financial Health

How is Spirax-Sarco Engineering's financial position?


Financial Position Analysis

Short Term Liabilities: SPX's short term assets (£656.9M) exceed its short term liabilities (£298.9M).

Long Term Liabilities: SPX's short term assets (£656.9M) do not cover its long term liabilities (£677.9M).


Debt to Equity History and Analysis

Debt Level: SPX's debt to equity ratio (71.7%) is considered high.

Reducing Debt: SPX's debt to equity ratio has increased from 27.2% to 71.7% over the past 5 years.

Debt Coverage: SPX's debt is well covered by operating cash flow (35.6%).

Interest Coverage: SPX's interest payments on its debt are well covered by EBIT (39.6x coverage).


Balance Sheet

Inventory Level: SPX has a high level of physical assets or inventory.

Debt Coverage by Assets: SPX's debt is covered by short term assets (assets are 1.2x debt).


Next Steps

Dividend

What is Spirax-Sarco Engineering's current dividend yield, its reliability and sustainability?

1.09%

Current Dividend Yield


Dividend Yield vs Market

company1.1%marketbottom25%1.8%markettop25%4.9%industryaverage2.5%forecastin3Years1.3%

Current dividend yield vs market & industry

Notable Dividend: SPX's dividend (1.1%) isn’t notable compared to the bottom 25% of dividend payers in the UK market (1.83%).

High Dividend: SPX's dividend (1.1%) is low compared to the top 25% of dividend payers in the UK market (4.95%).


Stability and Growth of Payments

Stable Dividend: SPX's dividends per share have been stable in the past 10 years.

Growing Dividend: SPX's dividend payments have increased over the past 10 years.


Current Payout to Shareholders

Dividend Coverage: With its reasonably low payout ratio (34.3%), SPX's dividend payments are well covered by earnings.


Future Payout to Shareholders

Future Dividend Coverage: SPX's dividends in 3 years are forecast to be well covered by earnings (41.6% payout ratio).


Next Steps

Management

What is the CEO of Spirax-Sarco Engineering's salary, the management and board of directors tenure and is there insider trading?

6.0yrs

Average management tenure


CEO

Nick Anderson (58yo)

6yrs

Tenure

UK£2,323,478

Compensation

Mr. Nicholas J. Anderson, also known as Nick, BSc Civil Engineering, MBA, has been the Group Chief Executive, and Executive Director of Spirax-Sarco Engineering plc since January 16, 2014 and March 15, 201 ...


CEO Compensation Analysis

Compensation vs Market: Nick's total compensation ($USD3.02M) is about average for companies of similar size in the UK market ($USD3.42M).

Compensation vs Earnings: Nick's compensation has been consistent with company performance over the past year.


Management Age and Tenure

6.0yrs

Average Tenure

56.5yo

Average Age

Experienced Management: SPX's management team is seasoned and experienced (6 years average tenure).


Board Age and Tenure

1.8yrs

Average Tenure

58yo

Average Age

Experienced Board: SPX's board of directors are not considered experienced ( 1.8 years average tenure), which suggests a new board.


Insider Trading

Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.


Recent Insider Transactions

BuyUK£101,12509 Aug 19
James Robert Pike
EntityIndividual
Role
Chairman of the Board
Independent Chairman of the Board
Shares1,250
Max PriceUK£80.90

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.


Management Team

  • Neil Daws (57yo)

    MD of Steam Specialties Business & Executive Director

    • Tenure: 16.6yrs
    • Compensation: UK£1.28m
  • Kevin Boyd (54yo)

    CFO & Executive Director

    • Tenure: 3.7yrs
    • Compensation: UK£1.44m
  • Nick Anderson (58yo)

    Group Chief Executive & Executive Director

    • Tenure: 6yrs
    • Compensation: UK£2.32m
  • Charles Song

    President & GM of Spirax Sarco Engineering(China) Ltd

    • Jim Devine

      Group Human Resources Director

      • John Senior

        Group Financial Controller

        • Andy Robson (56yo)

          General Counsel & Company Secretary

          • Tenure: 7.6yrs
        • Shaun Laubscher

          Head of Talent & Organisational Development

          • Dan Harvey

            Head of Internal Audit


            Board Members

            • Jamie Pike (64yo)

              Independent Chairman of the Board

              • Tenure: 1.7yrs
              • Compensation: UK£154.53k
            • Kevin Thompson (59yo)

              Independent Non-Executive Director

              • Tenure: 0.7yrs
            • Jane Kingston (61yo)

              Independent Non-Executive Director

              • Tenure: 3.3yrs
              • Compensation: UK£60.30k
            • Neil Daws (57yo)

              MD of Steam Specialties Business & Executive Director

              • Tenure: 16.6yrs
              • Compensation: UK£1.28m
            • Kevin Boyd (54yo)

              CFO & Executive Director

              • Tenure: 3.7yrs
              • Compensation: UK£1.44m
            • Peter France (50yo)

              Independent Non-Executive Director

              • Tenure: 1.8yrs
              • Compensation: UK£41.40k
            • Trudy Schoolenberg (61yo)

              Senior Independent Director

              • Tenure: 1yrs
              • Compensation: UK£50.30k
            • Nick Anderson (58yo)

              Group Chief Executive & Executive Director

              • Tenure: 6yrs
              • Compensation: UK£2.32m
            • Caroline Johnstone (58yo)

              Independent Non-Executive Director

              • Tenure: 0.8yrs

            Company Information

            Spirax-Sarco Engineering plc's company bio, employee growth, exchange listings and data sources


            Key Information

            • Name: Spirax-Sarco Engineering plc
            • Ticker: SPX
            • Exchange: LSE
            • Founded: 1888
            • Industry: Industrial Machinery
            • Sector: Capital Goods
            • Market Cap: UK£6.740b
            • Shares outstanding: 73.62m
            • Website: https://www.spiraxsarcoengineering.com

            Number of Employees


            Location

            • Spirax-Sarco Engineering plc
            • Charlton House
            • Cirencester Road
            • Cheltenham
            • Gloucestershire
            • GL53 8ER
            • United Kingdom

            Listings

            TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
            SPXLSE (London Stock Exchange)YesOrdinary SharesGBGBPJan 1992
            SPXS.FOTCPK (Pink Sheets LLC)YesOrdinary SharesUSUSDJan 1992
            SPXLBATS-CHIXE (BATS 'Chi-X Europe')YesOrdinary SharesGBGBPJan 1992
            1LNBDB (Deutsche Boerse AG)YesOrdinary SharesDEEURJan 1992
            SPX NBMV (Bolsa Mexicana de Valores)YesOrdinary SharesMXMXNJan 1992
            SPXS.YOTCPK (Pink Sheets LLC)ADRUSUSDMay 2011

            Biography

            Spirax-Sarco Engineering plc provides engineered solutions for users of industrial and commercial steam systems, electrical heating and temperature management systems, and process fluid paths and pumping systems. It offers industrial and commercial steam systems, including condensate management, controls, and thermal energy management products and solutions for heating and curing, cleaning and sterilising, hot water generation, space heating, and humidification; electrical process heating and temperature management solutions, such as industrial heaters and systems, heat tracing, and various component technologies; and peristaltic and niche pumps and associated fluid path technologies, including pumps, tubing, and specialty filling systems and products for single-use applications. The company serves food, beverage, pharmaceutical and biotechnology, oil, gas, chemical, healthcare, power generation, mining, precious metal processing, water and wastewater, pulp and paper, rubber and plastic, textile, and other sectors; and original equipment manufacturers. Its products are also used to provide space heating, humidification, and hot water in public and private buildings. The company sells its products directly, as well as through distributors. It operates in Europe, the Middle East, and Africa; the Asia Pacific; and the Americas. The company was founded in 1888 and is headquartered in Cheltenham, the United Kingdom. 


            Company Analysis and Financial Data Status

            All financial data provided by Standard & Poor's Capital IQ.
            DataLast Updated (UTC time)
            Company Analysis2020/01/20 20:40
            End of Day Share Price2020/01/20 00:00
            Earnings2019/06/30
            Annual Earnings2018/12/31


            Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.