Halma Earnings: 12% EBIT Rise Beats Expectations and Shows Growth Potential; Raise Fair Value by 10%

Investors have welcomed narrow-moat Halma’s stellar full-year results, which saw adjusted EBIT grow 12%, beating management’s guidance and company-compiled consensus. Halma shares are trading 11% higher at the time of writing. An equal contribution between organic and acquired EBIT growth has helped address investors' concerns over Halma’s ability to further grow inorganically as it becomes a larger organization and also highlights the robustness of its end markets. Fiscal 2024 marks the first year since 2015 that Halma has achieved its organic and acquired profit growth target of 5% each. We’re raising our fair value estimate by 10% to GBX 2,600, reflecting the favorable outlook of its end markets and Halma’s impressive pricing power, allowing it to further expand its operating margins. We view shares as fairly valued.