Equity prospects

Renishaw

James Godrich, Research Assistant

Price£19.70

52 week high-low£25.50 - £15.77

Net yield2.4

Hist / pros per14.6 - 22.2

Equity market cap£1,427

Renishaw is a United Kingdom-based, specialist electronic engineering company operating in three segments: metrology, healthcare and additive manufacturing, more commonly known as 3D printing.

The business model centres on finding a problem, patenting a solution and using the high margin sales to enable them to offer excellent customer support and to invest in their next project.

The Company continues to drive future growth through its heavy investment in R&D. In the last year 18% of their revenues were reinvested in R&D resulting in 54 patents being granted and a further 32 filed. The Company is not without its problems: a six week order book, spikes in demand caused by an ever changing product range and lumpy cash flows make guidance difficult. All of this means that the Company will likely continue to experience short term volatility, exacerbated by its 47% free float and limited communication with the market.

Renishaw has shown impressive organic growth with both average revenue and pre-tax profit growing at c.13% and c.12% respectively per annum since 1983. An exciting pipeline of products combined with continued R&D suggests that a long term growth story may also lie ahead.

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