Why Shares In Sprue Aegis PLC Jumped Today

Sprue Aegis PLC (LON:SPRP) revises its full-year guidance upwards after a large increase in the order book.

Mark Stones

Mark Stones (TMFMumbojumbones) joined The Motley Fool in 2014 and initially worked as a writer for Fool.co.uk, before joining the Fool’s analyst programme. Mark earned a BA in English from Loughborough University. Although he spends more time reading annual reports than Russian literature these days, he still appreciates a novelist’s antipathy toward the accepted view, which is a useful attitude when trying to sniff out hidden gems on the stock market. His approach to investing has been largely influenced by the principles of Warren Buffett and Peter Lynch. He also takes a special interest in the work of healthcare companies. Outside of investing, Mark plays guitar, enjoys good writing and has a guilty passion for combat sports.

Published 18 August, 2014 4:05 pm BST

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.

What:

Shares of AIM-traded Sprue added 26p to 258p earlier today, an 11% gain, after the home safety products company revised its guidance for 2014.

Since releasing a trading update for the six months to 30 June Sprue’s order book has grown markedly, driven by a large increase in smoke detector orders from France, and as such the board now anticipates full year results to beat expectations.

So what:

Sales grew by 11% to £24m in the half year, driven by strong demand for FireAngel smoke detectors in continental Europe. UK performance, meanwhile, was mired by fewer campaigns targeting awareness of carbon monoxide poisoning and destocking, but the newly bolstered order book will more than offset this.

Now what:

The balance sheet, as of 30 June, showed £12m of cash and no debt. Sprue shares trade at 23 times last year’s earnings which, factoring into account this morning’s upgraded earnings forecast, could fall to a P/E multiple below 17.

Investors can expect a further update on the company’s prospects at the time of the publication of its half year results to be announced on 22 September.