VESUVIUS (VSVS) 579.5P
VESUVIUS IS A cyclical engineer that relies on the health of the global steel industry. We think its rating is undemanding given decent earnings growth potential and a nice dividend yield on top.
The £1.58bn company designs and manufactures specialist products that control and protect the flow of steel in foundries, plus other casting units. It also supplies efficiency modules to the industry.
The steel industry is currently in decent shape and the outlook appears fairly positive according to most analysts.
This has played well for Vesuvius, which is one of many UK heavy industry companies to have enjoyed double-digit increases to earnings forecasts thanks to positive trading, growth inspired acquisitions and streamlined operational costs.
UBS anticipates operating profit margins going from 9.5% in 2016 to 11.5% in 2018. A dividend growing in the midsingle digits and yielding 2.9% this year bolsters a modestlyrated share price trading on a 2018 price earnings multiple of 13.1. (SF)