Meggitt (MGGT)

Business description

Meggitt is a global manufacturer of aerospace equipment, sensing and defence systems. Its end markets are Civil Aerospace (41%), Military (45%) and Energy & Other (14%).

Q3 IMS: Slow trading, but quick buyback launch

Institutional Comment | Aerospace & Defence | 10/11/2014

Meggitt’s IMS was a curate’s egg: a pretty material cut to 2015 guidance, coupled with an admission that surplus/cannibalised aircraft parts are probably a far broader and systemic threat to the aftermarket than had been assumed. However, the surprise unveiling of an immediate share buyback, albeit only c 6% of the share capital, both reduces the near-term likelihood of a major acquisition and demonstrates that the board understands both this risk and the undesirable impact of an over-strong balance sheet. The shares trade at a premium to their aero engine peers, a level that could be supported over the next c 12 months by the buyback.

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Stock data

Market cap.£2826.3m
Last close364.600p
High / Low (52 weeks)587.5p / 347.3p
Stock market listingLN, LN
Forecast net debt (£m)506
Forecast gearing ratio (%)N/A
TeamIndustrials
SectorAerospace & Defence

Price performance

%1m3m12m
Actual0.9(23.7)(29.8)
Relative *1.4(18.9)(25)

* % Relative to local index