Norcros(LSE: NXR), a supplier of branded showers, taps, bathroom accessories, tiles and adhesives, flies under the radar of most investors. Over the past year, shares in the company have hardly budged, despite a positive trading performance.
Today the company published yet another set of upbeat figures. For the first half, management expects revenue to be 12% higher at £145m, up from £129m in the same period last year. UK revenue for the period was 8.4% higher than the previous year, while its South African business revenue was up 4.8% on a constant currency basis. A focus on cash flow has helped the business reduce debt from £27m to £21m year-on-year.
Looking forward Norcros said: "Against the backdrop of challenging market conditions, our performance demonstrates the strength of our market positions and the resilience of our diversified business portfolio delivering revenue growth."
Following this robust first-half performance, the firm expects results for its fiscal year ending March 31 2018 to meet its expectations.
Slow and steady
This is one of my favourite companies. While it may not be the fastest growing business in the world, the group has reported stable double-digit revenue and profit rises year after year. Growth has come from both acquisitions and organically. Cash generation is high with the business converting around 100% of net income to free cash flow on average for the past five years. This has enabled management to pay a lucrative dividend to investors (currently 4.4%) and pay for acquisitions. Pre-tax profit has expanded fourfold since 2013.
As long as management can maintain this course for the next decade, investors should be well rewarded. What's more, at current levels the shares are a steal. Despite its historical growth and cash flows, the shares currently trade at a deeply discounted 6.1 times forward earnings.
Pricey but attractive
Scapa Group(LSE: SCPA) is at the other end of the valuation spectrum. The company, which is a global supplier of bonding solutions and manufacturer of adhesive-based products for the healthcare and industrial markets, said yesterday that group revenue, trading profits, and margins are all ahead of last year.
For the full-year, management now expects to beat analyst projections. Analysts had been expecting earnings per share growth of 11%. Off the back of this forecast, the market has awarded the company a forward P/E of 28.8.
Scapa has managed to increase pre-tax profits threefold in the past five years. Considering the group's leading position in its key markets, as well as the defensive nature of the healthcare industry, I believe that the business is a great long-term buy for investors.
The one downside, however, is Scapa's dividend yield. At the time of writing, the shares only support a yield of 0.5%. That being said, the payout is covered more than seven times by earnings per share, leaving plenty of room for further payout growth, or special dividends.
A better buy?
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Rupert Hargreaves owns shares in Norcros. The Motley Fool UK has recommended Norcros. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.