- Instrument and control engineer Spectris(LSE: SXS) has suffered a few years of tough market conditions, with North American trading subject to that unwelcome epithet "challenging".
Though statutory 2016 results looked bad, the year was impacted by one-offs including a £115m impairment relating to Omega Engineering and ESG Solutions. That alone reduced the firm's EPS figure by a massive 96.8p to just 8.6p -- but adjusted EPS came in at 127.5p, for a rise of 12%.
It looks like 2017 should be something of a transformational year for the company's fortunes, with EPS expected to gain 7% this year followed by a further 12% next -- perhaps not the kind of massive rises that would have growth investors salivating, but a welcome reversal of the recent trend.
May's trading update boasted a 22% rise in sales for the period. And while like-for-like sales declined by 1% in the troublesome North American market, we saw an 11% rise in the Asia Pacific region and 4% in Europe. But the comment that I really liked was: "The group continues to be highly cash generative and maintains a strong financial position."
Overall, what I'm seeing here is a company that's been through a bit of a down cycle, but which is enjoying an improving outlook while still in rude health. Net debt of £150.9m at the end of 2016 was only around 70% of EBITDA, which seems fine for a firm at a relative low point in its earnings, and strong cash flow should boost that position in the medium term.
The dividend is modest at around 2%, but it's well covered and has kept on growing significantly ahead of inflation, with rises of better than 5% forecast for this year and next.
Doing something right
Online travel agent On The Beach(LSE: OTB) is an intriguing prospect. Floated in September 2015, the shares were doing well until they were hammered by the UK's vote to leave the EU in June last year, an event that is increasingly threatening an economic slowdown and a serious tightening of our discretionary spending belts.
But since a post-referendum low, we've seen the share price climb by 128% to today's 403p, more than double the IPO price. On The Beach appears to be doing something right.
Part of that something is clear from interim results released in early May, which showed a 28% growth in adjusted pre-tax profit, with adjusted earnings per share up 27%. Net debt was reduced to an impressive £2.3m from £6.6m a year previously -- and that was after the £12m acquisition of Sunshine.co.uk.
Disrupting the market
How does it do it? The company focuses on one specific market, and speaks of its "journey to disrupt the online retail of beach holidays with its scalable, flexible, innovative technology". The firm's business model is also, apparently, asset-light and cash-generative, two things I generally like to see in any company.
I confess I'm not too keen on the company's moniker, even if it is a good fit for its target market, because I see generic-sounding names as providing a barrier to building a strong brand image. I'm also a little concerned about a possible lack of barriers to entry, and I wonder how easy it would be for others to follow the same strategy (especially an asset-light one).
But I do like what I've seen of On The Beach's operations so far.
Alan Oscroft has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. 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.