Less Ads, More Data, More Tools Register for FREE

Pin to quick picksULE.L Share News (ULE)

  • There is currently no data for ULE

Watchlists are a member only feature

Login to your account

Alerts are a premium feature

Login to your account

Ultra Electronics shares break out after firm signals 'very good visibility'

Thu, 30th Jul 2020 09:24

(Sharecast News) - Ultra Electronics resumed dividend payments after recovering "very good visibility" for the back half of the year.
The defence and security specialist grew both its top and bottom lines, while sharply improving its cash conversion and order book.

Chief executive officer, Simon Pryce, said the company's major markets remained stable, although the headwind from commercial aerospace was expected to intensify over the remainder of the year.

So too, the tailwind from lower selling, general and administrative costs was expected to fade as those stabilised.

"Despite this, we remain confident that 2020 will, as anticipated, be a year of good progress for Ultra," he added.

The order book fattened by 15.7% on a reported basis to reach £1,173.2m. with sales ahead by 6.7% to £413.1m.

Significant contract wins during the period included a $101m order for sonobuoys and another $45m order for its MK54 lightweight Torpedo array.

It was also awarded a contract to provide software for the US Marine Air Defense Integrated System against drones and another to help secure America's Link 16 network over the Alaskan air space.

To take note of, defence spend in all of the company's key "five-eyes" markets was described as "robust".

In turn, underlying profits before tax rose 3.0% to £47.9m for earnings per share of 54.7p.

On a statutory basis however, profits before tax dropped 21.4% to 29.8p due to losses on its foreign exchange contracts as Sterling weakened.

Management also indicated that some of the initiatives under its ONE Ultra transformation programme to optimise the organisation might be accelerated in the back half of the year.

The company's cash conversion jumped from 25% to 98%, resulting in an increase in its operating cash flow from £14.0m to £61.3m.

As a proportion of earnings before interest, taxes, depreciation and amortisation net debt fell from 1.96 times to 1.20.

Following the "strong" first half performance and expected full-year outcome relative to their scenario modelling for Covid-19, the board decided to undertake an additional interim dividend of 39.2p per shares which would equal the postponed final payout for 2019.

The regular interim dividend meanwhile was raised by 2.7% to 15.4p.

But the company said the proposed amount for the interim payout had been influenced by remaining cautiousness due to the pandemic.

As of 0905 BST shares of Ultra Electronics were breaking out to fresh record highs, jumping by 9.14% to 2,388.0p.

Stock in Ultra Electronics was changing hands on a price-to-earnings multiple of 22.8 but on a price-to-sales ratio of just 2.0.

Peel Hunt analyst Henry Carver reiterated his 'buy' recommendation for the shares following the company's latest results, telling clients that "Ultra's end markets are robust and the outlook is positive".

He also argued that the firm's margin profile was attractive with "plenty more to go" from the self-help initiatives already underway, while the management team's efforts to change the culture "with positive effects already coming through".

His 2,400.0p target price for the shares equated to a 2021 price-to-earnings multiple of "just" 18 times, which he termed "undemanding" in comparison to Chemring on 17 times and Avon Rubber on 31 times.

At present, he said, the shares were changing hands at 16.5 times' forward earnings for 2021.



More News
7 May 2021 15:53

UK dividends calendar - next 7 days

UK dividends calendar - next 7 days

Read more
5 May 2021 15:54

UK shareholder meetings calendar - next 7 days

UK shareholder meetings calendar - next 7 days

Read more
4 May 2021 09:40

BROKER RATINGS: JPMorgan and Morgan Stanley differ on Trustpilot

BROKER RATINGS: JPMorgan and Morgan Stanley differ on Trustpilot

Read more
26 Apr 2021 10:27

Global military spending up 2.6% in 2020 despite pandemic

(Sharecast News) - Global military expenditure rose by 2.6% to $1.98trn last year despite some defence funds being reallocated to fight the Covid-19 pandemic, the Stockholm International Peace Research Institute said in a report issued on Monday.

Read more
22 Apr 2021 15:22

DIRECTOR DEALINGS: EKF Diagnostics chair sells; Flowtech chair buys

DIRECTOR DEALINGS: EKF Diagnostics chair sells; Flowtech chair buys

Read more
15 Apr 2021 12:52

Thursday broker round-up

(Sharecast News) - Naked Wines: Liberum downgrades to hold with a target price of 800p.

Read more
15 Apr 2021 09:50

Ultra Electronics and QinetiQ rated 'neutral' by Citi

(Sharecast News) - Citi gave shares of Ultra Electronics and QinetiQ 'neutral' ratings as the bank started coverage of the defence engineers.

Read more
15 Apr 2021 09:47

BROKER RATINGS: Citigroup neutral on QinetiQ and Ultra Electronics

BROKER RATINGS: Citigroup neutral on QinetiQ and Ultra Electronics

Read more
1 Apr 2021 16:13

UK dividends calendar - next 7 days

UK dividends calendar - next 7 days

Read more
23 Mar 2021 13:12

Tuesday broker round-up

(Sharecast News) - Fevertree: Barclays upgrades to buy with a target price of 2,500p.

Read more
23 Mar 2021 09:44

BROKER RATINGS: Goldman Sachs cuts Kingfisher and raises Bodycote

BROKER RATINGS: Goldman Sachs cuts Kingfisher and raises Bodycote

Read more
16 Mar 2021 11:31

Barclays stays at 'equalweight' on Ultra Electronics, says backlog growth already priced in

(Sharecast News) - Analysts at Barclays stuck to their 'equalweight' recommendation for shares of Ultra Electronics, despite what they termed the defence specialist's "solid" full-year performance across 2020.

Read more
10 Mar 2021 22:01

IN BRIEF: Ultra Electronics CFO Mark Sclater acquires shares

IN BRIEF: Ultra Electronics CFO Mark Sclater acquires shares

Read more
10 Mar 2021 13:21

Wednesday broker round-up

(Sharecast News) - Ultra Electronics: JP Morgan upgrades to overweight with a target price of 2,350p.

Read more
10 Mar 2021 09:35

BROKER RATINGS: Liberum upgrades Ferrexpo to Buy from Hold

BROKER RATINGS: Liberum upgrades Ferrexpo to Buy from Hold

Read more

Login to your account

Don't have an account? Click here to register.

Quickpicks are a member only feature

Login to your account

Don't have an account? Click here to register.