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Looking for a profitable fast-growing stock? Look at Ab Dynamics

23 Nov 2016 • About Ab Dynamics ($ABDP) • By InTwits

Pay attention to Ab Dynamics as a growth stock. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story


Ab Dynamics showed fast growth in the last financial year. Ab Dynamics's revenue surged on 23.9% in FY2016. Together with revenue growth Ab Dynamics also managed to keep EBITDA growth. EBITDA grew 17.6% for the same period.

In the longer period Ab Dynamics showed fast revenue growth of 18.9% from FY2013 to FY2016 annually. EBITDA surged on 26.5% from FY2013 to FY2016 annually.

Ab Dynamics ($ABDP) financials for the last 5 years

mln. £ FY2012 FY2013 FY2014 FY2015 FY2016
Revenue912141720
Revenue growth, %36.8%13.8%19.3%23.9%
Gross margin, %28.1%25.7%29.1%32.4%30.2%
SG&A, %7.51%9.96%9.94%7.99%
EBITDA22345
EBITDA growth, %21.1%21.2%42.0%17.6%
EBITDA margin, %21.3%18.9%20.1%24.0%22.7%
Net Income11234
Net Income margin, % 15.7%11.7%15.5%19.6%18.9%
 
CAPEX01012
CAPEX/Revenue, %2.25%5.57%2.49%4.18%7.86%
Debt00000
Cash365810
Net Debt/EBITDA-1.3x-2.6x-1.8x-2.0x-2.2x
 
ROIC, %44.4%34.3%28.4%31.4%28.0%
ROE, %34.6%22.2%23.2%27.1%24.9%

Profitability and return on investment


EBITDA growth was partly attributed to margin expansion. In the last 3 years the company's EBITDA margin surged on 3.80 pp from 18.9% in FY2013 to 22.7% in FY2016.

Ab Dynamics shows attractive ROIC at 28.0% for the last 12 months which assumes stable development model. During the last three years it dropped - it was 34.3% in FY2013. For the last three years the average ROIC was 29.3%.

Net Income margin decreased slightly on 0.700 pp from 19.6% to 18.9% in FY2016. In the last 3 years the company's Net Income margin surged on 7.20 pp from 11.7% in FY2013 to 18.9% in FY2016.

Ab Dynamics operates at ROE of 24.9%. For the last three years the average ROE was 25.0%.

Capital expenditures (CAPEX)


To this fast growth Ab Dynamics had to invest in CAPEX.In FY2016 the company had CAPEX/Revenue of 7.86%. CAPEX/Revenue surged on 2.28 pp from 5.57% in FY2013 to 7.86% in FY2016. It's average CAPEX/Revenue for the last three years was 4.84%.

Leverage (Debt)


Ab Dynamics has negative net debt at -2.2x Net Debt/EBITDA - at the same time with high growth. If we look for the longer period the company showed fast leverage growth of 0.37x from -2.60x in FY2013 to -2.23x in FY2016.

Valuation vs. comparable companies


At the end of trading day today Ab Dynamics traded at 16.1x EV/EBITDA which is 34.4% lower than 24.5x Industrial Engineering peer group avearge calculated on the basis of 44 companies. The company trades at 22.0x P/E which is not surprisingly 98.1% higher than 11.1x Industrial Engineering industry avearge calculated based on 2 companies.

For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The company trades at 24.6x EV/(EBITDA-CAPEX) which is higher vs. -1.6x Industrial Engineering industry avearge calculated based on 3 companies.

Peers in Industrial Engineering


Below you can find Ab Dynamics benchmarking vs. other companies in Industrial Engineering industry. It's shown for the period of 5 years for the key financial metrics. Each table has median value for all the companies in the industry together with individual financial data of the top-5 companies in the industry by particular financial metric.

Top companies by Revenue growth, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Slingsby(H.C.) ($SLNG)-4.2%-4.3%-9.9%35.5%
Mincon Group ($MCON)53.5%-17.1%4.2%28.8%
Flowtech Fluidpower ($FLO)-5.8%-5.1%17.7%18.7%
Somero Enterprise Inc ($SOMA)47.1%40.1%31.5%18.5%
Hydro International ($HYD)11.7%-7.2%-0.1%17.7%
 
Median (23 companies)11.7%2.9%-0.0%0.3%-2.2%
Ab Dynamics ($ABDP)36.8%13.8%19.3%23.9%


Top companies by Gross margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Somero Enterprise Inc ($SOMA)48.7%52.2%54.0%55.8%
Hydro International ($HYD)37.3%39.4%45.3%46.4%
Rotork ($76ID)46.8%47.4%48.0%45.7%44.3%
Northbridge Industrial Services ($NBI)57.0%54.0%48.4%43.4%
Amiad Water Systems Ltd ($AFS)42.8%40.8%38.9%40.5%
 
Median (21 companies)31.3%30.0%33.2%34.2%30.1%
Ab Dynamics ($ABDP)28.1%25.7%29.1%32.4%30.2%


Top companies by EBITDA margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Northbridge Industrial Services ($NBI)30.3%29.2%32.4%32.5%
Somero Enterprise Inc ($SOMA)12.6%23.9%27.4%28.2%
Rotork ($76ID)27.0%27.6%28.0%25.0%22.8%
Mincon Group ($MCON)22.9%30.0%22.7%17.6%
Hms Hydraulic Mach & Sys Grp ($HMSG)16.5%17.0%7.5%16.0%
 
Median (23 companies)8.6%8.0%7.4%7.9%8.8%
Ab Dynamics ($ABDP)21.3%18.9%20.1%24.0%22.7%


Top companies by CAPEX/Revenue, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Pressure Technologies ($PRES)2.4%2.3%3.3%11.6%
Somero Enterprise Inc ($SOMA)1.7%1.8%2.1%5.9%
Mitsubishi Electric Corp ($MEL)4.4%4.2%3.7%4.6%4.1%
Braime(T.F.& J.H.)(Hldgs) ($BMTO)2.3%9.6%5.6%3.8%
Hms Hydraulic Mach & Sys Grp ($HMSG)4.4%4.5%3.6%3.7%
 
Median (23 companies)2.4%2.0%2.4%2.2%4.2%
Ab Dynamics ($ABDP)2.2%5.6%2.5%4.2%7.9%


Top companies by ROIC, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Somero Enterprise Inc ($SOMA)6.0%34.1%51.7%54.3%
Energy Technique ($ETQ)18.9%19.3%47.5%41.6%
Renold ($RNO)18.8%-12.7%-2.5%41.3%39.1%
Rotork ($76ID)50.0%45.4%38.1%21.9%17.0%
Hms Hydraulic Mach & Sys Grp ($HMSG)17.5%14.7%3.2%14.7%
 
Median (23 companies)13.5%11.4%10.8%8.8%4.3%
Ab Dynamics ($ABDP)44.4%34.3%28.4%31.4%28.0%


Top companies by Net Debt / EBITDA

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Tricorn Group ($TCN)-0.3x0.9x5.8x4.0x7.2x
Slingsby(H.C.) ($SLNG)-3.3x-4.6x-3.7x3.7x
Avingtrans ($AVG)3.1x0.7x1.2x3.6x-22.4x
600 Group ($SIXH)3.2x2.2x3.1x
Chamberlin ($CMH)0.5x0.4x2.2x2.2x
 
Median (23 companies)0.5x0.6x0.6x1.1x0.4x
Ab Dynamics ($ABDP)-1.3x-2.6x-1.8x-2.0x-2.2x