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Diploma plc (GB:DPLM)
:DPLM

Diploma (DPLM) AI Stock Analysis

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GB

Diploma

(LSE:DPLM)

70Outperform
Diploma's robust financial performance is a significant strength, with strong revenue growth and cash flow management. However, technical indicators show bearish trends, and the stock appears overvalued with a high P/E ratio. Recent positive corporate events reflect confidence but have a limited impact on the overall score.
Positive Factors
Financial Performance
Diploma has released strong FY24A results, with adj. operating profit +20% to £285m, c.1% ahead of consensus.
Growth Potential
Diploma's recent financial performance screens well against higher valued compounders, indicating potential upside from further compound growth.
Valuation
Analyst views the stock's current trading at a discount to its five-year average as a buying opportunity.
Negative Factors
Stock Performance
The stock has experienced a weak recent share price performance, dropping 16% since President Trump's second inauguration.
Valuation Concerns
The stock is trading on a one-year forward P/E of c.28.3x, slightly above the five-year average.

Diploma (DPLM) vs. S&P 500 (SPY)

Diploma Business Overview & Revenue Model

Company DescriptionDiploma PLC is a UK-based international group specializing in the distribution of specialized technical products and services. Operating across three main sectors—Life Sciences, Seals, and Controls—the company provides essential components and services to a diverse range of industries. In Life Sciences, Diploma offers consumables and instrumentation to the healthcare and environmental industries. The Seals sector supplies aftermarket sealing products and kits for heavy mobile machinery and industrial equipment. The Controls segment delivers wiring, connectors, and fasteners for applications in aerospace, defense, and other industrial markets.
How the Company Makes MoneyDiploma PLC generates revenue primarily from the distribution and sale of specialized technical products and services across its three core sectors. In the Life Sciences sector, revenue is earned through the sale of consumables, instrumentation, and related services to healthcare and environmental industries, often involving long-term supply contracts and recurring sales. The Seals sector makes money by providing aftermarket sealing products, which are critical for maintenance and repair operations in heavy mobile machinery and industrial equipment, ensuring a steady demand. The Controls sector contributes to revenue through the sale of wiring, connectors, and fasteners, with strong ties to industries such as aerospace and defense, where reliability and quality are paramount. The company's earnings are further enhanced by strategic partnerships with manufacturers and through its focus on delivering high-value, high-margin products, along with value-added services such as technical support and logistics management.

Diploma Financial Statement Overview

Summary
Diploma demonstrates strong revenue growth and improved margins, with a net profit margin of 9.5%. The balance sheet shows moderate leverage and effective equity utilization. Strong cash flow generation underscores financial stability, positioning the company well for future growth.
Income Statement
85
Very Positive
Diploma has demonstrated strong revenue growth, with a 13.6% increase from the previous year, indicative of a healthy expansion trajectory. The gross profit margin stands at 46.1%, showing effective cost management. The net profit margin has improved to 9.5%, reflecting increased profitability. However, the EBIT and EBITDA margins, at 15.2% and 21.6% respectively, suggest room for operational efficiency improvements.
Balance Sheet
78
Positive
The company's debt-to-equity ratio of 0.62 indicates moderate leverage, which is manageable but should be monitored. A healthy return on equity (ROE) of 14.6% showcases effective use of shareholder funds. The equity ratio is stable at 50.1%, suggesting a balanced capital structure. Overall, the balance sheet is solid, supporting stable financial health.
Cash Flow
80
Positive
Free cash flow has grown by 7.4%, signaling robust cash generation. The operating cash flow to net income ratio is strong at 1.53, indicating high cash conversion efficiency. The free cash flow to net income ratio of 1.38 further underscores solid cash flow management. The cash flow statement highlights the company's ability to reinvest and manage financial obligations effectively.
Breakdown
TTMSep 2024Sep 2023Sep 2022Sep 2021Sep 2020
Income StatementTotal Revenue
1.26B1.36B1.20B1.01B787.40M538.40M
Gross Profit
428.50M628.90M261.00M335.30M288.40M194.40M
EBIT
196.90M207.40M187.60M148.80M114.00M71.70M
EBITDA
263.00M294.30M254.00M203.50M138.40M99.80M
Net Income Common Stockholders
116.10M129.30M117.70M94.70M69.80M49.30M
Balance SheetCash, Cash Equivalents and Short-Term Investments
28.40M55.50M62.40M41.70M24.80M206.80M
Total Assets
190.00M1.77B1.59B1.39B994.00M703.30M
Total Debt
0.00552.10M397.30M439.70M254.50M33.70M
Net Debt
-28.40M496.60M334.90M398.00M229.70M-173.10M
Total Liabilities
52.00M877.40M687.30M721.50M453.00M172.60M
Stockholders Equity
135.60M888.00M895.60M662.00M536.30M527.00M
Cash FlowFree Cash Flow
180.00M178.40M166.10M109.60M109.90M76.00M
Operating Cash Flow
202.30M198.10M189.20M125.00M116.10M85.40M
Investing Cash Flow
-213.30M-294.80M-270.90M-172.20M-447.70M-17.70M
Financing Cash Flow
2.70M90.30M107.50M64.70M139.00M114.20M

Diploma Technical Analysis

Technical Analysis Sentiment
Negative
Last Price3720.00
Price Trends
50DMA
4299.24
Negative
100DMA
4320.76
Negative
200DMA
4297.10
Negative
Market Momentum
MACD
-128.57
Negative
RSI
36.29
Neutral
STOCH
24.65
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GB:DPLM, the sentiment is Negative. The current price of 3720 is below the 20-day moving average (MA) of 3949.70, below the 50-day MA of 4299.24, and below the 200-day MA of 4297.10, indicating a bearish trend. The MACD of -128.57 indicates Negative momentum. The RSI at 36.29 is Neutral, neither overbought nor oversold. The STOCH value of 24.65 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GB:DPLM.

Diploma Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
75
Outperform
£9.70B33.7416.90%0.89%11.94%20.48%
GBIMI
74
Outperform
£4.28B17.5623.50%1.73%0.64%4.92%
70
Outperform
£4.99B38.5614.50%1.59%13.59%6.14%
69
Neutral
£5.71B18.2717.83%1.75%-4.95%36.95%
62
Neutral
$8.08B13.633.82%3.13%3.58%-14.35%
GBRSW
59
Neutral
£1.76B17.9911.07%3.31%4.71%0.43%
* Industrials Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
GB:DPLM
Diploma
3,720.00
110.51
3.06%
GB:RSW
Renishaw
2,305.00
-1,799.02
-43.84%
GB:HLMA
Halma plc
2,502.00
271.36
12.17%
GB:IMI
IMI plc
1,686.00
-75.95
-4.31%
GB:WEIR
Weir Group plc (The)
2,052.00
59.69
3.00%

Diploma Corporate Events

Other
Diploma PLC Director Invests in Company Shares
Positive
Mar 25, 2025

Diploma PLC announced that Ian El-Mokadem, a Non-Executive Director, has purchased 500 Ordinary Shares of the company, reflecting a personal investment in the firm’s stock. This transaction, conducted on the London Stock Exchange, underscores the director’s confidence in the company’s future prospects and is made in compliance with the UK Market Abuse Regulation, potentially signaling positive sentiment to stakeholders and the market.

Business Operations and StrategyRegulatory Filings and Compliance
Diploma PLC Announces Change in Voting Rights
Neutral
Mar 24, 2025

Diploma PLC has announced a change in its voting rights structure following an acquisition or disposal by Norges Bank, which now holds a 3.011810% stake in the company. This adjustment in voting rights reflects a slight increase from the previous position, indicating a potential shift in shareholder influence and possibly impacting the company’s strategic decisions.

Regulatory Filings and Compliance
Diploma PLC Announces Share Purchase by Chair’s Family
Neutral
Mar 24, 2025

Diploma PLC, a company involved in the distribution of specialized products and services, announced a transaction involving the purchase of shares by Michele Claude Lowden, the wife of the company’s Non-Executive Chair, David Lowden. This transaction, which took place on 21 March 2025, resulted in the Lowden family holding a total of 3,646 Ordinary Shares. The announcement was made in compliance with the UK Market Abuse Regulation, highlighting the company’s adherence to regulatory requirements.

Regulatory Filings and Compliance
Diploma PLC Director Increases Shareholding
Positive
Mar 24, 2025

Diploma PLC announced that Katie Bickerstaffe, a Non-Executive Director, has purchased 201 ordinary shares of the company, increasing her total shareholding to 1,421 shares. This transaction, conducted on the London Stock Exchange, reflects confidence in the company’s market position and future prospects, aligning with regulatory compliance under the UK Market Abuse Regulation.

Regulatory Filings and Compliance
Diploma PLC Announces Change in Voting Rights by The Capital Group
Neutral
Mar 18, 2025

Diploma PLC, a UK-based company, has announced a change in the voting rights held by The Capital Group Companies, Inc. The notification indicates that The Capital Group Companies, Inc. has decreased its voting rights in Diploma PLC from 13.000363% to 12.863009%, as of March 14, 2025. This change reflects a minor adjustment in the company’s shareholder structure, potentially impacting its governance dynamics. The Capital Group Companies, Inc., a prominent investment management firm, manages these shares through its various subsidiaries, focusing on institutional and high net worth clients.

Executive/Board Changes
Diploma PLC Announces New Non-Executive Director Appointment
Positive
Mar 3, 2025

Diploma PLC announced the appointment of Ian El-Mokadem as a Non-Executive Director to the Board and several committees of United Utilities Group PLC, effective from June 1, 2025. This strategic appointment highlights Diploma PLC’s commitment to strengthening its leadership and governance, potentially enhancing its industry positioning and stakeholder confidence.

M&A TransactionsRegulatory Filings and Compliance
Diploma PLC Announces Change in Voting Rights
Neutral
Feb 25, 2025

Diploma PLC, a UK-based company, has announced a change in its voting rights structure due to an acquisition or disposal by FMR LLC, a firm registered in Boston, USA. The notification reveals that FMR LLC’s voting rights in Diploma PLC have decreased from 5.1958% to 4.9822%, indicating a slight reduction in their stake. This adjustment in voting rights could potentially impact the company’s governance dynamics and influence from its stakeholders.

Business Operations and StrategyRegulatory Filings and Compliance
Diploma PLC Announces Update on Major Shareholder Holdings
Neutral
Feb 14, 2025

Diploma PLC has announced a voluntary disclosure regarding an update in the chain of corporations controlled by its substantial shareholder, FMR LLC. This update indicates a slight increase in voting rights from 5.06% to 5.1958%, amounting to 6,971,520 total voting rights. This change could potentially impact the company’s shareholder dynamics and influence FMR LLC’s stake in Diploma PLC’s decision-making processes, reflecting a strategic move in aligning its holdings more effectively.

Other
Diploma PLC Shareholder Structure Update: Norges Bank Adjusts Voting Rights
Neutral
Feb 14, 2025

Diploma PLC announced a change in its shareholder structure as Norges Bank has adjusted its voting rights, reducing from 3.015160% to 2.974780% as of February 12, 2025. This change in voting rights indicates a slight divestment by Norges Bank, which may influence the company’s governance dynamics or investor confidence.

Diploma PLC Director Jennifer Ward Purchases 1,000 Shares
Jan 17, 2025

Diploma PLC announced that Jennifer Ward, a Non-Executive Director of the company, has purchased 1,000 ordinary shares. This transaction highlights the confidence of the board members in the company’s prospects. The purchase was made on the London Stock Exchange at a price of £42.50 per share, and this move aligns with the regulatory requirements under the UK Market Abuse Regulation.

Diploma PLC AGM Resolutions Passed with Strong Support
Jan 15, 2025

Diploma PLC, a prominent company, successfully conducted its Annual General Meeting where all resolutions proposed to shareholders were approved by poll votes. These resolutions included a final dividend, re-elections, and other strategic financial measures, reflecting strong shareholder support and potentially enhancing the company’s market operations and governance standing.

Diploma PLC Announces Robust Q1 Performance, Maintains Full-Year Outlook
Jan 15, 2025

Diploma PLC reported a strong start to the fiscal year, with a 7% organic revenue growth and a total reported revenue growth of 12% for the first quarter ending December 31, 2024. The growth was driven by acquisitions and a robust operating margin, despite a slight negative impact from foreign exchange. The company maintained its full-year guidance, reflecting confidence in achieving a 6% organic revenue growth, 2% net acquisition growth, and a strong operating margin of approximately 21%. This performance strengthens Diploma’s position in the distribution industry and reassures stakeholders of its continued financial health and strategic momentum.

Diploma PLC Director Acquires Shares, Reinforcing Governance Standards
Jan 10, 2025

Diploma PLC announced that Janice Stipp, a Non-Executive Director, has purchased 700 Ordinary Shares of the company, valued at $56.86 per share, on December 13, 2024. This transaction was carried out in compliance with the UK Market Abuse Regulation, indicating the company’s adherence to legal and regulatory standards, potentially enhancing stakeholder confidence in its governance practices.

Glossary
OutperformA stock rated as "Outperform" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock is likely to deliver higher returns compared to the average returns of other stocks in the same sector or market index. Investors might consider this stock a good buying opportunity.
NeutralA stock rated as "Neutral" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly attractive nor unattractive for investment. Investors may consider holding onto the stock, as it is not expected to either significantly outperform or underperform the market.
UnderperformA stock rated as "Underperform" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests that the stock may deliver lower returns compared to the average returns of other stocks in the same sector or market index. Investors might consider selling the stock or avoiding it as an investment.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.