15th October 2013
Following a very strong run brokers are tipping engineer GKN as a share worthy of investor attention writes Philip Scott.
The FTSE 100 listed group has witnessed its shares rise by 71% over the past year, while the past six months have seen it enjoy a 38% hike.
GKN designs and manufactures car parts including drive shafts and axle joints and is a leader in its field. It employs more than 48,000 people within its companies and joint ventures across some 30 countries.
The broker consensus on share data hub Digital Look has the stock rated a ‘buy’, as does The Share Centre.
Sheridan Admans, investment research manager at the latter group says: “GKN is a well-managed company with a firm eye on cash flow and return on capital employed. It currently trades on a forward P/E of around 13.5 times, and is in a sector that we believe is exhibiting good value at present, both on a national and international basis.
“In addition, GKN is likely to benefit from the increased production at Airbus and Boeing for some time and continues to do well from light vehicle production, despite demand expecting to be lower in the second half of the year compared to the first.”
It reported an impressive 12% rise in sales in its first half results, as its acquisition of Volvo Aero pays off, and it continues to see organic sales growth at a good pace. Earnings slipped 3% due to it being subjected to a higher tax rate, which was expected, profits before tax rose 5%.
Admans adds: “We recommend GKN as a ‘buy’ for investors seeking a balanced investment.”