Thursday, September 27, 2018

SGS Needs To Verify Its Own Self-Improvement Processes

Wherever there are regulations, there’s almost always some mechanism for ensuring compliance with them, and that has created an enormous global market in testing, inspection, and certification (or TIC). The largest player in a fragmented market, Switzerland’s SGS (OTCPK:SGSOY) (SGSN.S) not only helps companies stay in compliance with all manner of laws and regulations, but also help ensure product, process, and system quality, safety, and performance. The range of services SGS offers runs the gamut from testing corn shipments to refinery process optimization to auto emissions testing to testing electronics and toys for safety.

SGS is the leading player in a field with attractive growth characteristics, and the company has a decent track record of free cash flow generation, but management has established an unfortunate recent track record of over-promising and under-delivering on margin improvement, and the shares look pretty richly-valued even factoring in a relatively more stable trajectory for earnings.

Read more here:
SGS Needs To Verify Its Own Self-Improvement Processes

No comments: