SGS has announced stronger than expected annual results. Although organic growth declined slightly in the second half of the year, as expected, acquisitions took up the slack, and the operating margin is robust. Cash generation remains high and net debt moderate. In our view, the only disappointment is a cut in the total dividend. PLUS rating confirmed.
SGS has published interim results in line with expectations. Organic growth has remained strong and acquisitions are making a significant contribution to sales. The operating margin is slightly down YoY, as expected, and the group has set aside provisions for restructuring. Cash generation is marginally disappointing. Management has confirmed the group’s 2012 targets, with an additional note of caution.
SGS is a defensive growth stock which is statistically able to grow even if there is a mild global recession. Barriers to entry and the group’s business model enable it to generate a high level of profitability and free cash flow well above that of industrial businesses. This means it can keep its balance sheet relatively unleveraged while guaranteeing safe and attractive shareholder returns and the potential to make recurring acquisitions.
SGS published good 2011 results, with faster organic growth in the second half. The Ebit margin is still high despite growth investments made. The group continues to generate strong free cash flow and has adopted a financial policy which is gradually becoming more aggressive, now with a higher dividend and a share buyback program. Prospects for 2012 are still positive. PLUS code confirmed.
SGS is a defensive growth stock which we particularly like in the current chaotic economic climate. Statistically speaking, SGS is able to generate positive organic growth even in a scenario of global recession. The return on capital employed justifies the seemingly high classic valuation ratios. We are introducing this share with a PLUS code.