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Smiths Group (SMGZY)
OTHER OTC:SMGZY
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Smiths Group
(OTC:SMGZY)
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Rating:70Neutral
Price Target:
$39.00
▲(21.12% Upside)
Action:DowngradedDate:10/03/25
Smiths Group's overall stock score reflects its strong financial performance and positive earnings call, which highlight robust growth and shareholder returns. However, the high valuation and mixed technical indicators slightly temper the outlook. The company's strategic initiatives and operational efficiency position it well for future growth, despite some market challenges.
Positive Factors
Consistent organic revenue growth
Sustained organic growth for four years and an 8.9% increase shows durable end-market demand and effective commercial execution. This provides revenue visibility, supports reinvestment and M&A strategies, and reduces reliance on one-off items over the next several quarters.
Strong cash generation and conversion
High free cash flow, strong FCF growth and near-100% cash conversion demonstrate reliable cash conversion of earnings. That durable cash generation underpins dividends, buybacks and accretive M&A while insulating investment and operations from short-term revenue swings.
Healthy leverage and returns
Low leverage alongside a mid-teens ROE signals a conservative capital structure and efficient use of capital. This balance provides flexibility for strategic investments and reduces refinancing risk, supporting stable funding of long-term initiatives and shareholder returns.
Negative Factors
Reported revenue decline
A negative reported revenue growth rate in the latest year highlights persistent topline pressures that can erode margin leverage if sustained. It raises questions about end-market mix, pricing power and whether operational actions and M&A can offset secular or cyclical demand weakness.
Operational risk from cyber incident
A cyber incident that materially affected aftermarket operations demonstrates an operational vulnerability with lasting repercussions: service disruptions, customer confidence erosion and higher security and remediation costs that can depress recurring aftermarket revenue and margins.
Flex‑Tek accounting and market exposure
Accounting adjustments and material prior-year impacts reduce confidence in segment reporting while exposure to a weak U.S. construction market creates cyclical revenue risk. Combined, these factors increase earnings volatility and may constrain growth and capital allocation until resolved.
Smiths Group (SMGZY) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$9.72B
Dividend Yield1.79%
Average Volume (3M)1.80K
Price to Earnings (P/E)29.6
Beta (1Y)0.65
Revenue Growth-4.09%
EPS Growth22.06%
CountryUS
Employees15,750
SectorIndustrials
Sector Strength72
IndustryIndustrial - Machinery
Share Statistics
EPS (TTM)0.84
Shares Outstanding312,300,100
10 Day Avg. Volume1,538
30 Day Avg. Volume1,796
Financial Highlights & Ratios
PEG Ratio2.37
Price to Book (P/B)4.24
Price to Sales (P/S)2.96
P/FCF Ratio22.49
Enterprise Value/Market Cap0.81
Enterprise Value/Revenue2.69
Enterprise Value/Gross Profit19.09
Enterprise Value/Ebitda14.63
Forecast
1Y Price TargetN/A
Price Target UpsideN/A
Rating ConsensusN/A
Number of Analyst Covering0
EPS Forecast (FY)1.49
Revenue Forecast (FY)$4.22B
Smiths Group Business Overview & Revenue Model
Company DescriptionSmiths Group plc is a global technology company headquartered in the UK, operating across multiple sectors including aerospace, defense, medical technology, and industrial services. The company is known for its innovative solutions in detection, medical devices, and fluid management, providing critical products and services that enhance safety and efficiency in various applications. With a strong emphasis on engineering excellence, Smiths Group serves a diverse range of markets through its specialized divisions, including Smiths Detection, Smiths Medical, and Smiths Interconnect.
How the Company Makes MoneySmiths Group generates revenue through several key streams, primarily by selling high-tech products and services across its divisions. The company earns money from the sale of detection equipment used in security and safety applications, including explosive and narcotic detection systems. Moreover, its medical division provides a variety of devices, including infusion systems and vascular access products, which contribute significantly to its earnings. Smiths Interconnect offers advanced connectivity solutions that serve the aerospace and defense sectors, further diversifying its revenue base. Additionally, the company benefits from long-term contracts and partnerships with governmental and industrial entities, providing a stable income source. The focus on innovation and developing new technologies also plays a vital role in enhancing its competitive edge and revenue potential.
Smiths Group Earnings Call Summary
Earnings Call Date:Sep 23, 2025
(Q4-2025)
| % Change Since: |
Next Earnings Date:Mar 20, 2026
Earnings Call Sentiment Positive
The earnings call reflects a strong financial performance with consecutive years of organic growth and increased shareholder returns. While there are challenges such as the cyber incident's impact on John Crane and a subdued U.S. construction market, the positive growth in Smiths Detection and Smiths Interconnect, along with operational improvements and strategic plans, provide a robust outlook.Q4-2025 Updates
Positive Updates
Consistent Organic Revenue Growth
Fiscal year 2025 marks the fourth consecutive year of organic revenue growth, with group organic revenue up 8.9%, surpassing the 6% to 8% guidance.
Expansion of Operating Profit Margins
Operating profit grew 13.1% on an organic basis, with a 60 basis point margin expansion to 17.4%, at the top end of the guidance range.
Strong Return on Capital Employed
Return on capital employed increased by 170 basis points to 18.1%, driven by profit growth and efficient capital allocation.
Significant Shareholder Returns
Smiths returned GBP 460 million to shareholders through dividends and a share buyback program, amounting to GBP 1.7 billion over the past 4 years.
Smiths Detection's Robust Performance
Revenue increased 15.2% organically, with significant growth in aviation and notable contract wins in ports and borders.
Smiths Interconnect's Strong Growth
Reported a 22.5% organic sales increase, driven by strength in semiconductor test business and aerospace and defense revenue.
Negative Updates
Impact of Cyber Incident on John Crane
The cyber incident caused operational challenges, particularly affecting the aftermarket and delaying recovery.
Nonmaterial Balance Sheet Overstatement in Flex-Tek
Identified an isolated GBP 8 million in-year impact and a GBP 15 million statutory profit impact from prior years.
Subdued U.S. Construction Market
Flex-Tek's Industrial segment growth was challenged by conditions in the U.S. construction market.
Company Guidance
In the recent call, Smiths Group exceeded its fiscal year 2025 guidance, achieving an organic revenue growth of 8.9%, surpassing the expected 6% to 8% range. They expanded operating profit margins by 60 basis points to 17.4%, at the top end of the 40 to 60 basis points guidance. The company also marked a 5.1% increase in dividends, continuing a 74-year streak of dividend payments. Smiths executed three accretive acquisitions and progressed the separation of Smiths Interconnect and Smiths Detection, reporting Interconnect as discontinued operations. Looking ahead, the company anticipates 4% to 6% organic revenue growth for fiscal year 2026, with ongoing margin expansion. Earnings per share rose by 14.8%, and the return on capital employed increased by 170 basis points to 18.1%. Smiths also maintained a strong cash conversion rate of 99%, with a free cash flow of GBP 336 million, reflecting their disciplined capital allocation and strategic focus on sustainable growth and shareholder value.Smiths Group Financial Statement Overview
Summary
Smiths Group demonstrates a balanced financial profile with strong profitability and cash flow metrics. Despite a recent decline in revenue, the company maintains healthy margins and a stable balance sheet. The positive cash flow trends further reinforce its financial stability, positioning it well for future growth opportunities.Income Statement
Smiths Group has shown a decline in revenue growth with a negative growth rate of -6.93% in the latest year, indicating potential challenges in market demand or competition. However, the company maintains a solid net profit margin of 10.02%, reflecting effective cost management. The EBIT and EBITDA margins are also healthy, suggesting operational efficiency.65
Positive
Balance Sheet
The company's debt-to-equity ratio has improved over the years, currently at 0.33, indicating a stable leverage position. The return on equity is strong at 14.34%, showcasing effective use of equity to generate profits. The equity ratio is robust, suggesting a solid financial structure with a good proportion of assets financed by equity.70
Positive
Cash Flow
Smiths Group has demonstrated strong free cash flow growth of 15.66%, indicating improved cash generation capabilities. The operating cash flow to net income ratio is favorable, showing that the company effectively converts its earnings into cash. The free cash flow to net income ratio is also strong, highlighting efficient cash management.75
Positive
| Breakdown | Jul 2025 | Jul 2024 | Jul 2023 | Jul 2022 | Jul 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.92B | 3.13B | 3.04B | 2.57B | 2.41B |
| Gross Profit | 410.00M | 1.17B | 1.12B | 961.00M | 915.00M |
| EBITDA | 535.00M | 580.00M | 580.00M | 287.00M | 430.00M |
| Net Income | 292.00M | 250.00M | 231.00M | 1.03B | 284.00M |
Balance Sheet | |||||
| Total Assets | 4.01B | 4.23B | 4.36B | 5.22B | 5.34B |
| Cash, Cash Equivalents and Short-Term Investments | 195.00M | 459.00M | 285.00M | 1.06B | 405.00M |
| Total Debt | 667.00M | 659.00M | 654.00M | 1.17B | 1.50B |
| Total Liabilities | 1.95B | 1.98B | 1.95B | 2.50B | 2.91B |
| Stockholders Equity | 2.04B | 2.23B | 2.38B | 2.70B | 2.40B |
Cash Flow | |||||
| Free Cash Flow | 384.00M | 332.00M | 212.00M | 191.00M | 418.00M |
| Operating Cash Flow | 456.00M | 418.00M | 293.00M | 279.00M | 535.00M |
| Investing Cash Flow | -160.00M | 39.00M | -108.00M | 1.25B | -205.00M |
| Financing Cash Flow | -517.00M | -269.00M | -945.00M | -985.00M | -239.00M |
Smiths Group Technical Analysis
Negative
32.20
Price Trends
34.72
Negative
33.53
Negative
32.14
Positive
Market Momentum
-0.28
Positive
34.93
Neutral
8.38
Positive
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For SMGZY, the sentiment is Negative. The current price of 32.2 is below the 20-day moving average (MA) of 35.48, below the 50-day MA of 34.72, and above the 200-day MA of 32.14, indicating a neutral trend. The MACD of -0.28 indicates Positive momentum. The RSI at 34.93 is Neutral, neither overbought nor oversold. The STOCH value of 8.38 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for SMGZY.
Smiths Group Peers Comparison
UnderperformOutperform
Sector (63)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
77 Outperform | $9.24B | 17.13 | 29.51% | 2.04% | -1.64% | -2.50% | |
70 Neutral | $9.72B | 29.58 | 13.46% | 1.79% | -4.09% | 22.06% | |
67 Neutral | $9.94B | 31.85 | 25.19% | 1.28% | 2.37% | -6.93% | |
65 Neutral | $9.87B | 28.93 | 19.12% | 0.49% | -0.37% | 21.77% | |
63 Neutral | $10.79B | 15.43 | 7.44% | 2.01% | 2.89% | -14.66% | |
61 Neutral | $12.38B | 33.29 | 4.18% | 0.97% | -4.99% | 22.16% | |
60 Neutral | $11.77B | 50.02 | 6.19% | ― | 5.52% | 9.03% |
* Industrials Sector Average
SMGZY
Smiths Group
31.32
5.95
23.46%
DCI
Donaldson Company
85.80
17.78
26.14%
GNRC
Generac Holdings
200.53
68.05
51.37%
RRX
Regal Rexnord
186.22
68.73
58.50%
AOS
A. O. Smith Corporation
66.84
0.70
1.06%
CR
Crane Company
171.22
17.56
11.42%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
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.