Shares digital

Following the publication of strong results by engineering specialist Cookson (CKSN) both chief executive Nicholas Salmon and finance director Michael Butterworth made substantial purchases with Salmon investing some £260,000 and Butterworth just over £165,000.

Although Cookson has three divisions the main engine of growth is its ceramics business which is benefiting from the global growth in steel output. Last year the sales and profits of that division grew by 11% and 25% respectively. Margins rose to 14.4 in H2 but are still at the bottom of the recently stated target range of 14-14%. It now generates 65% of group profits.

Its importance will grow still further following the acquisition of Foseco (FOSE) next month. This deal should lead to significant synergies as well as improving the quality of the company’s earnings. The ceramics division generates most of its sales outside the UK. This year it should benefit from the continued growth in capacity in China Poland and the Czech Republic.

Although the electronics and precious metals divisions are suffering from some weakness in their markets, operational improvements are expected to more than offset any difficulties in the market place.

Nick Webster of Numis is forecasting earnings of 64.5p rising to 78.5p next year placing the shares on a PE of 9.5 falling to 7.8. Niranjan Aiyagari of another independent broker, UBS, has a 12-months price target of 940p, some 53% above the present price.

Shares says: The company has a strong growth record.The shares deserve a further re-rating.