Pressure Technologies is an attractive stock for a growth investor
16 Dec 2014 • About Pressure Technologies (
$PRES) • By InTwits
Pressure Technologies is a fast-growing stock in Industrial Engineering industry. It showed noticeble revenue performance in the last years among with attractive profitability and financial model.
Growth story
Pressure Technologies showed growth in the last financial year. The company's revenue surged on 57.1% in FY2014. Together with revenue growth Pressure Technologies also managed to keep EBITDA growth. EBITDA grew 74.8% for the same period.
In the last 3 years Pressure Technologies showed fast revenue growth of 32.7% from FY2011 to FY2014 annually. EBITDA surged on 59.2% from FY2011 to FY2014 annually.
Pressure Technologies ($PRES) financials for the last 5 years
| mln. £ | FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Revenue | 22 | 23 | 30 | 34 | 54 |
|---|
| Revenue growth, % | | 6.5% | 31.6% | 12.9% | 57.1% |
|---|
| Gross margin, % | 36.2% | 27.2% | 25.4% | 29.9% | 29.1% |
|---|
| SG&A, % | | | | | 14.6% |
|---|
| EBITDA | 4 | 2 | 3 | 4 | 8 |
|---|
| EBITDA growth, % | | -50.4% | 55.7% | 48.2% | 74.8% |
|---|
| EBITDA margin, % | 18.0% | 8.37% | 9.91% | 13.0% | 14.5% |
|---|
| Net Income | 3 | 0 | 1 | 2 | 4 |
|---|
| Net Income margin, % | 11.6% | 1.73% | 4.18% | 6.40% | 6.87% |
|---|
| |
| CAPEX | 1 | 1 | 1 | 1 | 2 |
|---|
| CAPEX/Revenue, % | 2.96% | 4.96% | 2.39% | 2.26% | 3.32% |
|---|
| Debt | 0 | 0 | 0 | 0 | 1 |
|---|
| Cash | 7 | 3 | 3 | 4 | 6 |
|---|
| Net Debt/EBITDA | -1.7x | -1.5x | -0.9x | -0.9x | -0.7x |
|---|
| |
| ROIC, % | 21.9% | 6.4% | 11.6% | 20.7% | 22.1% |
|---|
| ROE, % | 16.8% | 2.6% | 8.0% | 13.1% | 13.7% |
|---|
Profitability and return on investment
Margin expansion supported EBITDA growth. The company showed fast EBITDA margin growth of 1.50 pp from 13% to 14.5% in FY2014. In the longer period the company showed fast EBITDA margin growth of 6.10 pp from 8.40% in FY2011 to 14.5% in FY2014.
We call Pressure Technologies an attractive growth stock as together with the growth it delivers high ROIC at 22.1%. Three years ago it was considerably lower at 6.36%. For the last three years the average ROIC was 18.1%.
The company showed Net Income margin growth of 0.500 pp from 6.40% to 6.90% in FY2014. In the last 3 years Net Income margin surged on 5.20 pp from 1.70% in FY2011 to 6.90% in FY2014.
Pressure Technologies operates at ROE of 13.7%. For the last three years the average ROE was 11.6%.
Capital expenditures (CAPEX)
The company's CAPEX/Revenue was 3.32% in FY2014. Pressure Technologies's CAPEX/Revenue dropped on 1.64 pp from 4.96% in FY2011 to 3.32% in FY2014. It's average level of CAPEX/Revenue for the last three years was 2.65%.
Leverage (Debt)
Pressure Technologies has negative net debt at -0.7x Net Debt/EBITDA - at the same time with high growth. In the last 3 years leverage surged on 0.75x from -1.50x in FY2011 to -0.75x in FY2014.
Valuation vs. comparable companies
The market closed today at 5.9x EV/EBITDA for Pressure Technologies which is 63.2% lower than 16.0x Industrial Engineering peer group avearge calculated on the basis of 44 companies. The company trades at 14.0x P/E which is not surprisingly 52.9% higher than 9.1x Industrial Engineering industry avearge calculated based on 6 companies.
For capital intensive compnanies it's worth taking a look at EV/(EBITDA-CAPEX) multiple. The market closed today at 7.6x EV/(EBITDA-CAPEX) for Pressure Technologies which is higher vs. -0.4x Industrial Engineering peer group avearge calculated on the basis of 6 companies.
Peers in Industrial Engineering
Below we provide Pressure Technologies benchmarking against other companies in Industrial Engineering industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.
Top companies by Revenue growth, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Avingtrans ($AVG) | | 26.9% | -11.3% | 40.8% | 33.1% |
| Energy Technique ($ETQ) | | 10.2% | 22.6% | 6.4% | 26.7% |
| Mitsubishi Electric Corp ($MEL) | | 8.7% | -0.2% | -2.0% | 13.7% |
| Rotork ($76ID) | | | | 13.0% | 2.8% |
| 600 Group ($SIXH) | | -14.2% | 8.1% | 6.1% | -0.2% |
| |
|---|
| Median (9 companies) | | 26.9% | 8.1% | -2.0% | -0.2% |
|---|
| Pressure Technologies ($PRES) | | 6.5% | 31.6% | 12.9% | 57.1% |
Top companies by Gross margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Rotork ($76ID) | | | 46.8% | 47.4% | 48.0% |
| Tricorn Group ($TCN) | 32.2% | 31.8% | 33.3% | 36.5% | 36.1% |
| Energy Technique ($ETQ) | 26.5% | 25.7% | 28.1% | 27.1% | 34.6% |
| 600 Group ($SIXH) | 27.2% | 35.5% | 49.7% | 31.7% | 33.2% |
| Mitsubishi Electric Corp ($MEL) | 25.3% | 28.0% | 27.8% | 27.0% | 28.1% |
| |
|---|
| Median (8 companies) | 26.5% | 29.4% | 30.7% | 27.5% | 30.7% |
|---|
| Pressure Technologies ($PRES) | 36.2% | 27.2% | 25.4% | 29.9% | 29.1% |
Top companies by EBITDA margin, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Rotork ($76ID) | | | 27.0% | 27.6% | 28.0% |
| Ms International ($MSI) | 12.4% | 14.7% | 18.4% | 12.5% | 10.1% |
| Mitsubishi Electric Corp ($MEL) | 6.4% | 9.3% | 9.7% | 7.9% | 9.1% |
| Energy Technique ($ETQ) | 0.3% | -2.7% | 4.0% | 4.3% | 8.1% |
| 600 Group ($SIXH) | 2.4% | 4.9% | -0.1% | 4.0% | 5.8% |
| |
|---|
| Median (9 companies) | 5.4% | 6.8% | 8.2% | 7.9% | 5.8% |
|---|
| Pressure Technologies ($PRES) | 18.0% | 8.4% | 9.9% | 13.0% | 14.5% |
Top companies by CAPEX/Revenue, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Avingtrans ($AVG) | 4.6% | 2.7% | 8.6% | 4.6% | 5.0% |
| Mitsubishi Electric Corp ($MEL) | 3.3% | 3.0% | 4.4% | 4.2% | 3.7% |
| Renold ($RNO) | | | 1.8% | 1.6% | 3.3% |
| Tricorn Group ($TCN) | 0.9% | 0.9% | 1.9% | 4.6% | 3.3% |
| Rotork ($76ID) | | | 2.5% | 1.8% | 2.9% |
| |
|---|
| Median (9 companies) | 1.4% | 2.6% | 2.5% | 2.3% | 2.9% |
|---|
| Pressure Technologies ($PRES) | 3.0% | 5.0% | 2.4% | 2.3% | 3.3% |
Top companies by ROIC, %
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Energy Technique ($ETQ) | -2.6% | -14.3% | 18.9% | 19.3% | 47.5% |
| Rotork ($76ID) | | | 50.0% | 45.4% | 38.1% |
| Mitsubishi Electric Corp ($MEL) | 5.8% | 14.3% | 13.1% | 8.2% | 11.9% |
| Ms International ($MSI) | 17.5% | 26.1% | 30.7% | 17.6% | 11.0% |
| 600 Group ($SIXH) | -1.7% | 1.0% | -5.8% | 4.1% | 5.7% |
| |
|---|
| Median (9 companies) | -0.1% | 5.5% | 18.8% | 10.7% | 5.7% |
|---|
| Pressure Technologies ($PRES) | 21.9% | 6.4% | 11.6% | 20.7% | 22.1% |
Top companies by Net Debt / EBITDA
| FY2010 | FY2011 | FY2012 | FY2013 | FY2014 |
|---|
| Top 5 |
|---|
| Tricorn Group ($TCN) | 1.0x | 0.0x | -0.3x | 0.9x | 5.8x |
| Renold ($RNO) | | | 1.3x | | 5.4x |
| 600 Group ($SIXH) | 4.2x | 2.7x | | 3.2x | 2.2x |
| Avingtrans ($AVG) | 4.6x | 2.0x | 3.1x | 0.7x | 1.2x |
| Mitsubishi Electric Corp ($MEL) | 0.8x | 0.1x | 0.5x | 1.0x | -0.1x |
| |
|---|
| Median (8 companies) | 1.0x | 0.9x | 0.1x | 0.6x | 0.6x |
|---|
| Pressure Technologies ($PRES) | -1.7x | -1.5x | -0.9x | -0.9x | -0.7x |
