This morning plumbing business Reliance Worldwide Corporation Ltd (ASX: RWC) released its financial results for the year ended June 30, 2017. Below is a summary of the results with comparisons to the prior corresponding period.
- Net profit after tax of $65.6m, up 26%
- Net sales of $607.1m, up 17.2% on an FX-adjusted basis, 12.1% actual basis
- EBITDA (operating income) of $120.7m
- Forecast for EBITDA of $140m – $145m on FY18
- Earnings per share of 12.5 cents
- Final dividend of 3 cents per share, to take total dividends to 6 cents per share fully franked
Plumbing and toilet parts might not be as sexy as the tech sector, but Reliance's growth goes to show the best returns are often outside hyped sectors where investors blindly bid up share prices.
Driving Reliance's growth has been the success of its SharkBite PTC Plumbing Solution, with net sales of its products up 19% in the Americas, as the group's successful expansion into the giant U.S. market rightly excites investors.
The shares change hands for $3.70 this afternoon, which is around 29x trailing earnings per share, with a trailing yield of 1.62%.
This looks a high quality, founder led business, with an excellent track record of growth and it ticks all the boxes except perhaps valuation. Its EBITDA growth is forecast to be in the region of 19% in the year ahead, which some may feel is not quite enough to justify today's valuation. However, if the stock were a touch cheaper I would be an interested buyer.
