Retail investor favourite SDI Group (SDI:AIM) offered some evidence that there is still space for multi-year growth stories in portfolios as the shares roared towards the top of the AIM risers leader board on Friday.
In the current climate investors are desperate for positive news, so SDI’s update that guided for an annual performance ‘materially ahead’ of current market expectations has unsurprisingly gone down well.
The shares rallied 12% to 169p on Friday, although they remain 13% down year to date.
HEFTY FORECAST BEAT
Sales are expected to be approximately £49 million for the year to 30 April 2022, versus £35.1 million in 2021. ‘We expect organic sales growth for the year to be in excess of 20%, which further builds on last year’s 19% organic growth,’ the statement read.
Adjusted pre-tax profit is expected to be at least £10.5 million, up from the previous year’s £7.4 million.
The company adjusts its profits for reorganisation and acquisition costs, amortisation or impairment of acquired intangibles and share-based payment costs.
Analyst consensus estimates stood at £9.65 million adjusted pre-tax profit on £46.65 million revenue before today’s update.
FinnCap raised its 2023 revenue and adjusted pre-tax profit estimates by £2.5 million and £1 million, respectively.
LOYAL BACKING FROM INVESTORS
SDI is a collection of multiple subsidiaries that design and manufacture digital imaging, sensing and control equipment used in life sciences, healthcare, astronomy, manufacturing, precision optics and art conservation applications.
It operates a model closely resembling that of health, safety and environmental kit maker Halma (HLMA), a constituent of the FTSE 100, buying good value businesses that add consistent cash flow and profits to the overall group.
Several years of consistent growth and solid shareholder returns have seen SDI build a loyal shareholder following, both retail and fund managers. Five years ago, the stock was trading at around 20p.
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