TT shares back on course as it puts focus on aerospace
TT Electronics makes highly engineered, electronic components used in situations where safety and reliability are paramount.
Midas originally recommended the shares in 2009, when they were 77p. By 2012, when we took another look, the stock had soared to 162p and continued to rise for the next two years, reaching a high of 222p at the beginning of 2014.
Then Richard Tyson came in as chief executive, initiated a strategic review and swiftly delivered a profits warning. The shares slumped to 100p and have been on a slow recovery path ever since.
TT’s products, such as sensors, controls and electromagnets, are used in planes, cars, factories and hospitals. When Tyson arrived, the group was focused on the automotive sector, where profit margins were low and competition was fierce. He opted to focus on aerospace and defence, industry and medical equipment, investing in research and development to create more specialised, highermargin products.
The strategy appears to be working. Results for 2016 are due out on Thursday and are expected to show a 30 per cent increase in profits to £25million, rising to more than £28million this year. The dividend is likely to be maintained at 5.5p for 2016 but should rise to about 5.8p for the current year.
TT employs about 6,000 people worldwide, but most of its engineering work is done in the UK, Germany and America and the group recently upgraded a highend manufacturing facility in Bedlington, Northumberland.
Midas verdict: TT Electronic shares have roller-coastered over the past seven years and there have been some nerve-racking moments. But the group is on a strong footing now and the stock, which is trading at 156p, should benefit. Existing investors should hold tight. New ones may also snap up a few shares.