Thursday, September 20, 2018

Smiths Group Back To The Drawing Board With Value-Creation

Although Smiths Group (OTCPK:SMGZY) (SMIN.L) enjoyed a good spring/early summer, the shares have given up a lot of those gains as concerns continue to swirl around the Medical business, particularly now that the negotiations with ICU Medical (ICUI) have fallen apart. Not helping matters are concerns as to whether the John Crane business can continue to do all of the heavy lifting for the business and whether management is truly serious about generating value through active portfolio management.

The inability to sell Medical is a disappointment, and there’s really no denying that unwinding conglomerates is now in vogue. With Smiths inability to generate meaningful organic growth in many years, investors want more action even though the company has generated more respectable returns on capital. Given these pressures, Smiths upcoming earnings are going to be an important event for investors – moreso in terms of what management has to say about its vision for portfolio transformation over the next year or two.

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Smiths Group Back To The Drawing Board With Value-Creation

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