Spirax-Sarco Rewards Investors With 12% Dividend Increase After Strong 2022 Results; FVE Unchanged

Wide-moat Spirax-Sarco reported a strong set of full-year results, which were largely consistent with our expectations. Organic revenue grew 14%, comfortably ahead of global industrial production, and was further boosted by recent acquisitions. Organic operating profit growth of 7% was at a slower rate than revenue, which was anticipated given the step-up in the group’s investments for future growth opportunities. Nevertheless, the adjusted operating profit margin of 23.6% (160-basis-point decline) remains extremely impressive and epitomizes the quality of the group. We expect these investments combined with a record order book across its steam specialties and electric thermals solutions segments to support Spirax-Sarco's outperformance against global industrial production. We reiterate our GBX 11,800 fair value estimate and view shares as fairly valued.