GUD Holdings: strong earnings growth and high dividend yield

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.