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1. Company Snapshot

1.a. Company Description

Spirax-Sarco Engineering plc provides engineered solutions for the users of industrial and commercial steam systems, electrical heating and temperature management systems, and pumps and fluid path technologies.It offers industrial and commercial steam systems, including condensate management, controls, and thermal energy management products and solutions for heating and curing, cleaning and sterilizing, hot water generation, space heating, and humidification; electrical process heating and temperature management solutions, such as industrial heaters and systems, heat tracing, and various component technologies for industrial processes, heaters, and systems; and peristaltic and niche pumps and associated fluid path technologies, including pumps, tubing, and specialty filling systems and products for single-use applications.The company serves food, beverage, pharmaceutical and biotechnology, oil, gas, chemical, healthcare, power generation, buildings, mining and precious metal processing, water and wastewater, and pulp and paper, as well as original equipment manufacturers.


The company sells its products directly, as well as through distributors.It operates in Europe, the Middle East, and Africa; the Asia Pacific; and the Americas.Spirax-Sarco Engineering plc was founded in 1888 and is headquartered in Cheltenham, the United Kingdom.

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1.b. Last Insights on SPX

Spirax-Sarco Engineering's recent performance was driven by its strategic focus on steam management solutions and electric thermal solutions. The company has been investing in organic growth and acquisitions to expand its offerings. A recent report highlighted the company's fair value, suggesting potential for investors. Additionally, the company's expertise in steam technology positions it well to capitalize on industrial trends. Its recent earnings release showed resilience, with a solid order book and growth prospects. The company also considers shareholder returns, having previously engaged in share buybacks.

1.c. Company Highlights

2. Spirax Group Delivers Resilient H1 Results Amid Challenging Macro Backdrop

Spirax Group reported a solid set of half-year results, with 3% organic sales growth and 7% adjusted operating profit growth, despite a challenging macroeconomic environment. The company's focus on operational priorities, including commercial excellence, operational excellence, and organizational fitness, has driven growth and improved margins. Adjusted earnings per share (EPS) came in at £1.37, slightly below analyst estimates of £1.39.

Publication Date: Aug -12

📋 Highlights
  • Organic Sales & Profit Growth: 3% organic sales growth and 7% adjusted operating profit growth driven by operational priorities like commercial and operational excellence.
  • STS Segment Performance: 3% organic sales growth in Steam Thermal Solutions, with double-digit MRO/solutions sales growth in China despite large project headwinds.
  • ETS Segment Momentum: Double-digit growth in Electrical Thermal Solutions fueled by semicon demand, process heating, and a 20%+ orders growth in distributor partnerships.
  • Restructuring Savings: £35M annualized savings target on track, with £40M cost envelope, funding future growth in digital, services, and decarbonization initiatives.
  • Cash Conversion Efficiency: Improved to 61%, reflecting disciplined capital use and returns, supporting 4-5% capex-to-sales ratio guidance for 2024.

Segment Performance

The Steam Thermal Solutions (STS) segment saw organic sales growth of 3%, excluding large project headwinds from China and Korea. The company has pivoted to driving MRO and solutions sales from its large installed base in China, resulting in double-digit growth in these sales. In Korea, the company expects improved demand in the second half following elections and a proposed economic stimulus package.

Operational Excellence

The company's restructuring program is on track to deliver annual savings of £35 million, funding investments in future growth. Cash conversion improved to 61%, reflecting discipline in the use of capital and returns on investment. As Nimesh Patel, CEO, noted, "We're leveraging our resources to fund targeted investments in digital, services, and decarbonization, which will support our long-term targets."

Guidance and Outlook

The company expects an acceleration in growth in the second half, driven by strong order books, continued recovery in key end markets, and further delivery of operational priorities. Guidance for the full year remains unchanged, with organic growth in group revenue in line with 2024 and mid-single-digit organic growth in adjusted operating profit. Analysts are expecting 5.4% revenue growth next year.

Valuation

Spirax Group's current valuation looks reasonable, with a P/E Ratio of 26.46, P/B Ratio of 4.19, and EV/EBITDA of 15.16. The company's ROIC and ROE are also strong, at 9.59% and 16.16%, respectively. With a dividend yield of 1.97% and free cash flow yield of 4.73%, the company appears to be offering a decent balance of growth and income to investors.

3. NewsRoom

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With 84% institutional ownership, Spirax Group plc (LON:SPX) is a favorite amongst the big guns

Nov -26

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Why Analysts See Spirax Group's Growth Story Evolving After Recent Broker Updates

Nov -12

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Spirax Group plc's (LON:SPX) Stock On An Uptrend: Could Fundamentals Be Driving The Momentum?

Oct -28

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Calculating The Intrinsic Value Of Spirax Group plc (LON:SPX)

Sep -10

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Spirax Group (LON:SPX) Has Announced A Dividend Of £0.489

Aug -17

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Diploma finance chief quits after ‘lapse of judgment’ at company event

Aug -14

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Spirax Group First Half 2025 Earnings: EPS: UK£0.85 (vs UK£1.24 in 1H 2024)

Aug -14

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Shareholders in Spirax Group (LON:SPX) are in the red if they invested three years ago

Aug -10

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4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.73%)

6. Segments

Steam Thermal Solutions

Expected Growth: 5.5%

Steam Thermal Solutions from Spirax-Sarco Engineering plc's 5.5% growth is driven by increasing demand for energy-efficient steam systems, growing industrial production, and rising adoption of clean energy technologies. Additionally, Spirax-Sarco's strong brand reputation, innovative products, and expanding global presence contribute to the segment's growth.

Watson-Marlow

Expected Growth: 5.8%

Watson-Marlow's 5.8% growth is driven by increasing demand for single-use bioprocessing solutions, expansion in emerging markets, and strategic investments in digitalization and product innovation. Additionally, Spirax-Sarco's focus on sustainability and energy efficiency initiatives contributes to the segment's growth.

Electric Thermal Solutions

Expected Growth: 6.2%

Spirax-Sarco Engineering plc's Electric Thermal Solutions segment growth of 6.2% is driven by increasing demand for energy-efficient and environmentally friendly solutions, growing adoption in industrial processes, and expansion into emerging markets. Additionally, the segment benefits from the company's strong brand reputation, innovative product offerings, and strategic acquisitions.

7. Detailed Products

Steam Systems

Spirax-Sarco Engineering plc provides a range of steam systems including boilers, heat exchangers, and condensate recovery systems to help industries manage their steam efficiently.

Electroheat Solutions

The company offers a variety of electroheat solutions including electric heating elements, temperature control systems, and power controllers for industrial processes.

Pumps and Valves

Spirax-Sarco Engineering plc provides a range of pumps and valves for industrial applications including centrifugal pumps, positive displacement pumps, and control valves.

Heat Transfer Solutions

The company offers a range of heat transfer solutions including heat exchangers, condensers, and coolers for industrial applications.

Clean Steam Generators

Spirax-Sarco Engineering plc provides clean steam generators for industries that require high-purity steam for sterilization, humidification, and other applications.

Condensate Recovery Systems

The company offers condensate recovery systems to help industries recover and reuse condensate, reducing energy costs and environmental impact.

8. Spirax-Sarco Engineering plc's Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Spirax-Sarco Engineering plc is medium due to the availability of alternative products and services in the industrial equipment and machinery industry.

Bargaining Power Of Customers

The bargaining power of customers for Spirax-Sarco Engineering plc is low due to the company's strong brand reputation and the lack of buyer concentration in the industry.

Bargaining Power Of Suppliers

The bargaining power of suppliers for Spirax-Sarco Engineering plc is medium due to the presence of multiple suppliers in the industry, but the company's large scale of operations gives it some bargaining power.

Threat Of New Entrants

The threat of new entrants for Spirax-Sarco Engineering plc is low due to the high barriers to entry in the industrial equipment and machinery industry, including the need for significant capital investment and technical expertise.

Intensity Of Rivalry

The intensity of rivalry for Spirax-Sarco Engineering plc is high due to the presence of several established competitors in the industry, leading to a competitive market environment.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 47.36%
Debt Cost 6.06%
Equity Weight 52.64%
Equity Cost 7.49%
WACC 6.81%
Leverage 89.97%

11. Quality Control: Spirax-Sarco Engineering plc passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Stock-Card
Melrose

A-Score: 4.7/10

Value: 4.8

Growth: 2.1

Quality: 6.0

Yield: 2.5

Momentum: 8.5

Volatility: 4.0

1-Year Total Return ->

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Stock-Card
Interpump

A-Score: 4.5/10

Value: 4.0

Growth: 6.4

Quality: 6.8

Yield: 1.2

Momentum: 4.0

Volatility: 4.7

1-Year Total Return ->

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Stock-Card
Spirax-Sarco Engineering

A-Score: 4.4/10

Value: 2.2

Growth: 5.2

Quality: 5.4

Yield: 3.1

Momentum: 5.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Beijer Ref

A-Score: 4.4/10

Value: 2.4

Growth: 8.7

Quality: 5.5

Yield: 1.2

Momentum: 3.0

Volatility: 5.7

1-Year Total Return ->

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Stock-Card
Interroll

A-Score: 4.0/10

Value: 2.0

Growth: 4.7

Quality: 7.4

Yield: 2.5

Momentum: 4.0

Volatility: 3.7

1-Year Total Return ->

View Full Report
Stock-Card
VAT Group

A-Score: 3.5/10

Value: 0.2

Growth: 5.7

Quality: 7.9

Yield: 3.1

Momentum: 1.5

Volatility: 2.7

1-Year Total Return ->

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

68.95$

Current Price

68.95$

Potential

-0.00%

Expected Cash-Flows