Latest news with #WeirGroup
Telegraph
a day ago
- Business
- Telegraph
Higher profits and growing revenue paint an upbeat picture for this mining support firm
Questor is The Telegraph's stock-picking column, helping you decode the markets and offering insights on where to invest. The world economy's long-term outlook is extremely upbeat. Crucially, the present era of persistent above-target inflation across major developed economies is widely expected to gradually come to an end. This means that further interest rate cuts can be made that – once time lags have passed – act as a significant positive catalyst on global GDP growth. Therefore, given our long-term focus, Questor continues to view the prospects for cyclical businesses such as Weir Group in a positive light. The FTSE 100 member, which provides engineering solutions to mining companies, recently released an upbeat set of half-year results that showed it is making strong progress in implementing its growth strategy. The company's operating profit rose by 17pc versus the same period of the previous year. While growth in revenue of 4pc aided the company's profitability, the sharp rise was largely due to a 220 basis point increase in its operating profit margin. It stood at 19.8pc during the period as cost-cutting measures were successfully implemented.
Yahoo
2 days ago
- Business
- Yahoo
A Look At The Intrinsic Value Of The Weir Group PLC (LON:WEIR)
Key Insights Using the 2 Stage Free Cash Flow to Equity, Weir Group fair value estimate is UK£23.78 With UK£24.16 share price, Weir Group appears to be trading close to its estimated fair value The UK£28.29 analyst price target for WEIR is 19% more than our estimate of fair value Today we'll do a simple run through of a valuation method used to estimate the attractiveness of The Weir Group PLC (LON:WEIR) as an investment opportunity by estimating the company's future cash flows and discounting them to their present value. The Discounted Cash Flow (DCF) model is the tool we will apply to do this. Before you think you won't be able to understand it, just read on! It's actually much less complex than you'd imagine. Remember though, that there are many ways to estimate a company's value, and a DCF is just one method. If you still have some burning questions about this type of valuation, take a look at the Simply Wall St analysis model. Trump has pledged to "unleash" American oil and gas and these 15 US stocks have developments that are poised to benefit. The Method We're using the 2-stage growth model, which simply means we take in account two stages of company's growth. In the initial period the company may have a higher growth rate and the second stage is usually assumed to have a stable growth rate. To start off with, we need to estimate the next ten years of cash flows. Where possible we use analyst estimates, but when these aren't available we extrapolate the previous free cash flow (FCF) from the last estimate or reported value. We assume companies with shrinking free cash flow will slow their rate of shrinkage, and that companies with growing free cash flow will see their growth rate slow, over this period. We do this to reflect that growth tends to slow more in the early years than it does in later years. Generally we assume that a dollar today is more valuable than a dollar in the future, and so the sum of these future cash flows is then discounted to today's value: 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 Levered FCF (£, Millions) UK£322.8m UK£365.3m UK£383.4m UK£399.8m UK£415.1m UK£429.6m UK£443.6m UK£457.4m UK£471.1m UK£484.9m Growth Rate Estimate Source Analyst x8 Analyst x7 Est @ 4.94% Est @ 4.28% Est @ 3.82% Est @ 3.49% Est @ 3.27% Est @ 3.11% Est @ 3.00% Est @ 2.92% Present Value (£, Millions) Discounted @ 8.8% UK£297 UK£308 UK£297 UK£285 UK£272 UK£258 UK£245 UK£232 UK£220 UK£208 ("Est" = FCF growth rate estimated by Simply Wall St)Present Value of 10-year Cash Flow (PVCF) = UK£2.6b After calculating the present value of future cash flows in the initial 10-year period, we need to calculate the Terminal Value, which accounts for all future cash flows beyond the first stage. For a number of reasons a very conservative growth rate is used that cannot exceed that of a country's GDP growth. In this case we have used the 5-year average of the 10-year government bond yield (2.7%) to estimate future growth. In the same way as with the 10-year 'growth' period, we discount future cash flows to today's value, using a cost of equity of 8.8%. Terminal Value (TV)= FCF2035 × (1 + g) ÷ (r – g) = UK£485m× (1 + 2.7%) ÷ (8.8%– 2.7%) = UK£8.2b Present Value of Terminal Value (PVTV)= TV / (1 + r)10= UK£8.2b÷ ( 1 + 8.8%)10= UK£3.5b The total value is the sum of cash flows for the next ten years plus the discounted terminal value, which results in the Total Equity Value, which in this case is UK£6.1b. The last step is to then divide the equity value by the number of shares outstanding. Relative to the current share price of UK£24.2, the company appears around fair value at the time of writing. Remember though, that this is just an approximate valuation, and like any complex formula - garbage in, garbage out. The Assumptions Now the most important inputs to a discounted cash flow are the discount rate, and of course, the actual cash flows. You don't have to agree with these inputs, I recommend redoing the calculations yourself and playing with them. The DCF also does not consider the possible cyclicality of an industry, or a company's future capital requirements, so it does not give a full picture of a company's potential performance. Given that we are looking at Weir Group as potential shareholders, the cost of equity is used as the discount rate, rather than the cost of capital (or weighted average cost of capital, WACC) which accounts for debt. In this calculation we've used 8.8%, which is based on a levered beta of 1.196. Beta is a measure of a stock's volatility, compared to the market as a whole. We get our beta from the industry average beta of globally comparable companies, with an imposed limit between 0.8 and 2.0, which is a reasonable range for a stable business. View our latest analysis for Weir Group SWOT Analysis for Weir Group Strength Earnings growth over the past year exceeded the industry. Debt is well covered by earnings and cashflows. Dividends are covered by earnings and cash flows. Weakness Dividend is low compared to the top 25% of dividend payers in the Machinery market. Opportunity Annual earnings are forecast to grow for the next 3 years. Good value based on P/E ratio compared to estimated Fair P/E ratio. Threat Annual earnings are forecast to grow slower than the British market. Looking Ahead: Valuation is only one side of the coin in terms of building your investment thesis, and it ideally won't be the sole piece of analysis you scrutinize for a company. The DCF model is not a perfect stock valuation tool. Instead the best use for a DCF model is to test certain assumptions and theories to see if they would lead to the company being undervalued or overvalued. For instance, if the terminal value growth rate is adjusted slightly, it can dramatically alter the overall result. For Weir Group, we've put together three fundamental factors you should explore: Risks: Be aware that Weir Group is showing 1 warning sign in our investment analysis , you should know about... Future Earnings: How does WEIR's growth rate compare to its peers and the wider market? Dig deeper into the analyst consensus number for the upcoming years by interacting with our free analyst growth expectation chart. Other Solid Businesses: Low debt, high returns on equity and good past performance are fundamental to a strong business. Why not explore our interactive list of stocks with solid business fundamentals to see if there are other companies you may not have considered! PS. Simply Wall St updates its DCF calculation for every British stock every day, so if you want to find the intrinsic value of any other stock just search here. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Sign in to access your portfolio
Yahoo
20-06-2025
- Business
- Yahoo
Weir to acquire Townley for $150m to bolster presence in North America
Weir Group, a prominent player in mining technology, has signed a definitive agreement to acquire Townley Engineering and Manufacturing and Townley Foundry & Machine, collectively known as Townley, for £111m ($150m). This acquisition is set to enhance Weir's manufacturing capabilities and market presence in North America, especially in the vital phosphate industry. Townley, established in 1963, is renowned for its mining wear and abrasion solutions, offering a comprehensive range of products including slurry pumps, dredge pumps and cast foundry items. With operations in Ocala, Florida, at the heart of the phosphate mining region, Townley also boasts a wide service network across the US and partnerships in Canada and Central America. The strategic locations of Townley's operations are expected to augment Weir's market channels in North America and provide access to new customer bases. The in-region manufacturing will enable Weir to further localise production and reduce lead times, aligning with customer demands. The transaction is set for completion in the third quarter of 2025, pending customary US antitrust approvals. Weir CEO Jon Stanton said: 'The acquisition of Townley will significantly enhance our geographic presence in North America, enabling us to serve customers in the region more effectively and sustainably. It enhances our domestic manufacturing platform and strengthens Weir's position in the attractive market for phosphate, an important mineral in the fertilisers that are needed to support population growth. 'Townley is a highly complementary addition to Weir. We are looking forward to welcoming the team of more than 360 colleagues to Weir and are excited by the opportunity to combine our expertise to enhance productivity and sustainability for our customers.' Post-acquisition, Townley will be integrated into Weir's minerals division within the North American region. The acquisition is anticipated to be earnings-per-share accretive in its first full year and is expected to yield a return on invested capital that surpasses the weighted average cost of capital by 2028. The deal will be financed through existing debt facilities, with no impact on Weir's net debt forecast for the fiscal years 2025 and 2026. Recently, Weir Group secured contracts worth £40m from Codelco for a sustainable tailings transport solution in Chile's Atacama region. "Weir to acquire Townley for $150m to bolster presence in North America" was originally created and published by Mining Technology, a GlobalData owned brand. The information on this site has been included in good faith for general informational purposes only. It is not intended to amount to advice on which you should rely, and we give no representation, warranty or guarantee, whether express or implied as to its accuracy or completeness. You must obtain professional or specialist advice before taking, or refraining from, any action on the basis of the content on our site. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
15-06-2025
- Business
- Yahoo
If EPS Growth Is Important To You, Weir Group (LON:WEIR) Presents An Opportunity
For beginners, it can seem like a good idea (and an exciting prospect) to buy a company that tells a good story to investors, even if it currently lacks a track record of revenue and profit. But as Peter Lynch said in One Up On Wall Street, 'Long shots almost never pay off.' Loss making companies can act like a sponge for capital - so investors should be cautious that they're not throwing good money after bad. If this kind of company isn't your style, you like companies that generate revenue, and even earn profits, then you may well be interested in Weir Group (LON:WEIR). Now this is not to say that the company presents the best investment opportunity around, but profitability is a key component to success in business. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. The market is a voting machine in the short term, but a weighing machine in the long term, so you'd expect share price to follow earnings per share (EPS) outcomes eventually. That makes EPS growth an attractive quality for any company. Impressively, Weir Group has grown EPS by 27% per year, compound, in the last three years. As a general rule, we'd say that if a company can keep up that sort of growth, shareholders will be beaming. One way to double-check a company's growth is to look at how its revenue, and earnings before interest and tax (EBIT) margins are changing. Weir Group's EBIT margins are flat but, worryingly, its revenue is actually down. Suffice it to say that is not a great sign of growth. The chart below shows how the company's bottom and top lines have progressed over time. Click on the chart to see the exact numbers. Check out our latest analysis for Weir Group In investing, as in life, the future matters more than the past. So why not check out this free interactive visualization of Weir Group's forecast profits? Owing to the size of Weir Group, we wouldn't expect insiders to hold a significant proportion of the company. But we are reassured by the fact they have invested in the company. To be specific, they have UK£11m worth of shares. That shows significant buy-in, and may indicate conviction in the business strategy. While their ownership only accounts for 0.2%, this is still a considerable amount at stake to encourage the business to maintain a strategy that will deliver value to shareholders. For growth investors, Weir Group's raw rate of earnings growth is a beacon in the night. Further, the high level of insider ownership is impressive and suggests that the management appreciates the EPS growth and has faith in Weir Group's continuing strength. Fast growth and confident insiders should be enough to warrant further research, so it would seem that it's a good stock to follow. Of course, identifying quality businesses is only half the battle; investors need to know whether the stock is undervalued. So you might want to consider this free discounted cashflow valuation of Weir Group. Although Weir Group certainly looks good, it may appeal to more investors if insiders were buying up shares. If you like to see companies with more skin in the game, then check out this handpicked selection of British companies that not only boast of strong growth but have strong insider backing. Please note the insider transactions discussed in this article refer to reportable transactions in the relevant jurisdiction. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Yahoo
31-05-2025
- Business
- Yahoo
Is The Weir Group PLC (LON:WEIR) Potentially Undervalued?
The Weir Group PLC (LON:WEIR), might not be a large cap stock, but it saw a significant share price rise of 22% in the past couple of months on the LSE. The company is now trading at yearly-high levels following the recent surge in its share price. As a mid-cap stock with high coverage by analysts, you could assume any recent changes in the company's outlook is already priced into the stock. However, could the stock still be trading at a relatively cheap price? Let's examine Weir Group's valuation and outlook in more detail to determine if there's still a bargain opportunity. This technology could replace computers: discover the 20 stocks are working to make quantum computing a reality. The stock seems fairly valued at the moment according to our valuation model. It's trading around 6.67% above our intrinsic value, which means if you buy Weir Group today, you'd be paying a relatively fair price for it. And if you believe that the stock is really worth £22.74, there's only an insignificant downside when the price falls to its real value. Is there another opportunity to buy low in the future? Since Weir Group's share price is quite volatile, we could potentially see it sink lower (or rise higher) in the future, giving us another chance to buy. This is based on its high beta, which is a good indicator for how much the stock moves relative to the rest of the market. View our latest analysis for Weir Group Investors looking for growth in their portfolio may want to consider the prospects of a company before buying its shares. Although value investors would argue that it's the intrinsic value relative to the price that matter the most, a more compelling investment thesis would be high growth potential at a cheap price. With profit expected to grow by 25% over the next couple of years, the future seems bright for Weir Group. It looks like higher cash flow is on the cards for the stock, which should feed into a higher share valuation. Are you a shareholder? It seems like the market has already priced in WEIR's positive outlook, with shares trading around its fair value. However, there are also other important factors which we haven't considered today, such as the track record of its management team. Have these factors changed since the last time you looked at the stock? Will you have enough conviction to buy should the price fluctuates below the true value? Are you a potential investor? If you've been keeping tabs on WEIR, now may not be the most advantageous time to buy, given it is trading around its fair value. However, the optimistic prospect is encouraging for the company, which means it's worth further examining other factors such as the strength of its balance sheet, in order to take advantage of the next price drop. It can be quite valuable to consider what analysts expect for Weir Group from their most recent forecasts. At Simply Wall St, we have the analysts estimates which you can view by clicking here. If you are no longer interested in Weir Group, you can use our free platform to see our list of over 50 other stocks with a high growth potential. Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
