MRO LN

Melrose Industries PLC

Industrial/Transportation


Presented:01/10/2024
Price:£5.81
Cap:$11.88B
Current Price:£4.18
Cap:$8.27B

Presented

Date01/10/2024
Price£5.81
Market Cap$11.88B
Ent Value$11.65B
P/E RatioN/A
Book Value£2.71
Div Yield1.03%
Shares O/S1,331.93M
Ave Daily Vol3,009,932
Short IntN/A

Current

Price£4.18
Market Cap$8.27B
Melrose Industries Plc engages in aerospace manufacturing and industrial businesses. It manufactures airframe and engine structures and electrical interconnection systems for the global aerospace industry, across both civil and defence platforms. The company develops, builds, and supplies an extensive range advanced aerospace systems, components and technologies, which are used in aircrafts ranging from business jets, helicopters, and military aircraft to single aisles and large passenger planes. Melrose Industries was founded in 2003 and is headquartered in London, the United Kingdom.

Publicly traded companies mentioned herein: Melrose Industries PLC (MRO LN), RTX Corp (RTX)

Highlights

The presenter is long shares of Melrose Industries PLC (MRO LN), which he considers well-positioned within the attractive aerospace industry. MRO was historically run with a private equity structure and has an impressive history of buying, improving, then selling assets. In 2018, the company acquired GKN, which was made up of an aerospace segment and an automotive segment. More recently, management spun off the automotive business, creating a pure-play aerospace asset with a more normal C-Corp structure and two segments: Engines and Structures. Looking forward, he thinks the strong management team, improving cyclical trends, and share repurchases will lead to EPS above the consensus £0.27 in 2024 and £0.38 in 2025. Modeling EPS in the low-£0.40 range for 2025 and the high-£0.40 range for 2026 (there is no real consensus for 2026), along with a reasonable high-teen earnings multiple, he sees 50% – 75% upside from the current £5.80 share price over the next 18 months.

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Idea Discussion

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