GUD Holdings: strong earnings growth and high dividend yield

Bell Potter


GUD has announced a fiscal 2015 net profit of $34.8 million, up 12%, accompanied by a lift in the fully franked dividend from 36.0 cents to 42.0 cents. The key features were a very healthy improvement in profit margins on the back of restructuring/cost reduction programs together with the release of new products. Looking into fiscal 2016, the recently acquired Brown & Watson should result in dramatic profit growth. Putting it all together, we expect EPS growth of 45%. At yesterday’s closing price of $9.38, the prospective PER is a reasonable 13.1x and the fully franked dividend yield could be as high as 6.2%. In addition, the balance sheet is sound. All up, a standout in the mid-cap space.

Bell Potter Securities is a leading Australian stockbroking, investment and financial advisory firm that provides a comprehensive offering of financial services to a diversified client base that includes individuals, institutions and corporations.

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