Victrex Declares Special Dividend After Strong Finish; Shares Overvalued

Narrow-moat Victrex reported fiscal fourth quarter volumes of 1,436 tonnes, double the prior year period and about 15% above the company compiled consensus. However, profits were largely in line due to margins being below expectations from lower-than-expected medical in the mix and extra costs from an extended maintenance period. Cash generation was strong, which led to a mostly unexpected 50 pence special dividend being declared. With the special dividend and a generally positive outlook for fiscal 2022, shares rose 4% on the day, good enough to lead the group. We don’t expect to make a material change to our GBX 2,100 fair value estimate. At current levels, the shares look slightly overvalued.