Dull stock in earnings surprise....

..or Hill & Smith Holdings (even their name is dull) knock it out of the park unlike England's cricketers in the World Cup!
Yes final results from HILS today and they were well ahead of forecasts for the year to December 2014 and even came in close to this years forecasts of 46.1p of earnings and 18.3p dividend as they reported 45p (+11%) and 18p (+12.5% not the 16% stated in their bullet points in the results) respectively for this year.

Hill & Smith is a £466m market cap.international group with leading positions in the manufacture and supply of infrastructure products and galvanizing services to global markets and is well known for crash barriers and is a beneficiary of the current governments road investment strategy. They acknowledge this and say they are in the sweet spot of this and as a result they are making capital investments at 2.4 x depreciation, to capitalise on specific growth opportunities in UK roads and also in US galvanizing.

The balance sheet is geared but with Net debt reduced to 1.5 x EBITDA and a key financing facility extended to 2019 on more favourable terms apparently. This was achieved thanks to what they describe as record results, despite some currency headwinds and saw margins up by 0.8% to 10.8%. Despite this the Chief Executive was his usual cautious self when on the outlook he said:

"Trading conditions in many of our end markets continued to improve throughout the second half which, together with the implementation of strategic initiatives to increase returns, delivered strong year on year profit growth. Overall, although some markets remain challenging, 2015 is again expected to be a year of good growth."

Summary & Conclusion
It might be dull and the management are often cautious / realistic but nevertheless it has produced steady dividend growth over the last few years. This has seen the dividend rise by 80% from 10 pence in 2008 for a compound growth rate of 10.3% per annum over that period. The current 18 pence dividend leaves it on a yield of around 3% based on this mornings price of around 610 pence.

Meanwhile on the earnings front the P/E is a fairish looking 13.6x (2014) and it has a decent looking current earnings yield (EBIT/EV) of 8.75% which suggests it might be better value than it appears. There should also be some upgrades on the back of today's earnings surprise which is something else I like to see. Prior to today's numbers is had a Compound Income Score of 81 (100 is best) so I would probably expect this to improve once these numbers and presumably some upgrades are included.

Technically, as you can see from the chart below the shares are approaching their recent 12 month and all time high which may put some off, but can also be positive ultimately as it tends to put new buyers off, despite the positive news, which then ultimately gets reflected in the share price. So it is a tempting one to buy on that basis, but it might be worth waiting to see if it relapses perhaps after the gap up today and once we have a better feel for where this years numbers are likely to settle.

Finally as a reward for getting this far see the video at the end which seems appropriate to Hill & Smith - its Car Crash Compilation 2015 March - Accidents of the Week #47 - enjoy?