I do know I’m typically responsible of specializing in the better-known FTSE 100 shares when trying so as to add to my holdings. That stated, there are many different high quality companies to think about too. One I wish to take a more in-depth have a look at is Smiths Group (LSE: SMIN).

FTSE 100 shares wrestle however Smiths performs properly

Smiths has over 170 years of engineering experience, predominantly within the defence and aerospace sectors.

So what’s occurring with Smith shares? As I write, they’re buying and selling for 1,628p. Right now final 12 months, the shares have been buying and selling for 1,477p, which is a ten% improve over a 12-month interval.

I’m acutely aware that many FTSE 100 shares have suffered throughout this similar interval because of macroeconomic volatility so Smith’s share worth efficiency is enjoyable.

The bull and bear case

What drew my consideration to Smiths not too long ago have been its full-year outcomes launched earlier this week for the 12 months ended 31 July 2023. I discovered them to be glorious. The enterprise stated it had file income development, 18% increased than final 12 months. Along with this, working revenue soared 20% increased than final 12 months and the enterprise returned greater than £350m to traders by way of a boosted dividend, 5% increased than the earlier 12 months, and a share buyback scheme.

Along with this, my analysis confirmed me that Smiths has an excellent observe file of efficiency. Because the pandemic, it has grown income and revenue annually. Nevertheless, I’m conscious that previous efficiency isn’t a assure of the long run.

The agency’s investor returns coverage seems to be attractive to me, particularly the latest announcement of a accomplished share buyback scheme and bolstered dividend. That is at a time when many FTSE 100 shares are reducing or freezing dividends. Smiths present dividend yield stands at 2.5%. This will not be the best, however I’m extra excited by constant, secure dividends. Nevertheless, I do perceive dividends are by no means assured.

Away from the bull case, I have to notice a few points that might impression Smiths’ funding viability. Though I’m a fan of companies finishing acquisitions for development, like Smiths has been doing for a very long time, there’s all the time a danger these don’t work out. When this occurs, it may be expensive to eliminate a enterprise. Investor sentiment, efficiency, and payout might take a success.

One other difficulty for Smiths is the truth that there have been many provide chain points in latest occasions globally. This may very well be significantly problematic for the enterprise, with its merchandise and attain. This might have a cloth impression on delivering its merchandise to its prospects, in flip, hindering efficiency and returns.

My verdict

To conclude, I just like the look of Smiths and once I subsequent have some money to purchase some shares, I’ll add some to my holdings.

It’s straightforward to get caught up within the fanfare and information cycle of blue-chip shares with a family identify. Smiths will not be that, but it surely seems to be like an excellent inventory to purchase, for my part and one traders ought to take into account. It has an excellent observe file, a stable steadiness sheet, and rewards its shareholders too.