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Smiths Group PLC ADR - Stock Quote SMGZY

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Morningstar's Smiths Group PLC ADR Stock Analysis

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Smiths Group Is a Beneficiary of the Eventual Return to Normal Airline Travel

Business Strategy and Outlook

| Denise Molina, CFA |

Smiths Group is a collection of industry-leading niche businesses, each producing admirable margins and returns; however, growth across the group is inconsistent, with different divisions enjoying periods of strong demand but at disparate times. Research and development spending as a portion of sales has increased by 50 basis points over the past few years. However, to accelerate group-level revenue growth, several innovation winners--not a single one--are likely necessary, given the breadth of products across the businesses. The innovation cycle for each business is also likely several years, and the fruits of the recent ramp-up in spending have yet to be seen. That said, a few of these product categories, particularly in security and safety, have emerging technology potential that could lead to new market opportunities. Management sees a potential GBP 200 million-250 million in gross new revenue opportunities in the medium term. The net number will be likely lower after taking into account cannibalization of existing products by new product rollouts.

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Smiths Group PLC ADR's Company Profile

Business Description

With its start as a London jeweler in the 19th century, Smiths Group has for most of its history operated as a company operating disparate but economically attractive businesses. Thematically, it runs businesses that manufacture niche products in security- or safety-sensitive industries. Today, Smiths Group is split across four divisions: mechanical seals, weapons detection, electrical connectors, and specialized hoses. The end customers for these products include airports, NASA, government security or defense departments, and hospitals.

11-12 St James’s Square, 4th Floor
London, SW1Y 4LB, United Kingdom
T +44 2070041600
Industry Specialty Industrial Machinery
Most Recent Earnings
Fiscal Year End Jul 31, 2021
Stock Type
Employees 14,500