Revenues rose 9% to a record £40.2m in the first half of 2019 with adjusted pre-tax profit jumping 27% to £8.4m. Judges’ net cash pile also continues to grow, hitting £7.2m by the end of June compared to £700,000 at the end of 2018.

The firm had £20.8m in cash at the end of interim period — £5.1m more than at the end of December. And while the market minnow is unlikely to currently attract yield-hungry investors, the fact the interim dividend was hiked by no less than 25% today is indicative of just how confident management is in its future. 

Indeed, buoyed by recent business and a decent order book (despite what chairman Alex Hambro described as a “subdued second quarter“), management now predicts adjusted pre-tax profits and earnings per share for the full year will be ahead of previous analyst expectations of £15m and 188.4p, respectively.  

Having already climbed 42% in value so far in 2019, Judges’ shares are clearly not the bargain they once were. On 18 times forecast earnings before today’s upgrade, I still think they warrant attention once traders have realised some profit, especially as returns on capital and free cash flow are also going in the right direction. 

Revenue up, share price down

Also revealing interim numbers this morning was gaming services provider Keywords Studios (LSE: KWS) — a company that was propelled to mid-cap status when its share price multi-bagged between 2016 and 2018.

Here, revenue jumped a little under 40% to €153.2m, thanks to an increase in demand across all of the company’s service lines (and a rise in the number of clients buying 3 or more of said services).

Adjusted pre-tax profit climbed 14.3% to €18.4m, although gross margin fell slightly to 36.1% (from 37.4%) as a result of investment in its recruitment, training and facilities around the world. The latter is expected to bounce back in the second half as the company is able to grow capacity and offer new services.

Like Judges Scientific, Keywords also hiked its interim payout by double digits to 0.58p per share. Don’t get excited though – the 1.7p per share analysts expect for the full-year gives a yield of just 0.12%.

There’s been no let-up in the Dublin-based firm’s growth-by-acquisition strategy either, with four businesses purchased over the first half, and another (Berlin-headquartered TV Synchron) announced today. With net debt standing at just €9m, this spending spree is unlikely to end soon.

According to Keywords, trading in H2 so far has been encouraging with the board now predicting “strong organic revenue growth,” albeit a little slower than in H1, as some game developers wait for new games consoles due for release next year. That said, CEO Andrew Day said revenue would still be “at the upper end of current market expectations.”

Unfortunately, it would seem this wasn’t enough reassurance for some, with shares down almost 10% — further proof of just how unforgiving investors can be if companies on already punchy valuations in hot sectors do anything less than outperform (Keywords was trading on a forecast 29 times earnings).

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Paul Summers has no position in any of the stocks mentioned. The Motley Fool UK has recommended Judges Scientific and Keywords Studios. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

With this in mind, here are three market minnows that have all been setting new share price highs recently. 

High flyers

£220m cap scientific instruments business Judges Scientific (LSE: JDG) has been in excellent form of late, rising 46% since January. If 2018’s numbers are anything to go by, there could be more to come.

Thanks to strong demand and foreign exchange tailwinds, revenues grew 9% (5.5% of which was organic) to a record £77.9m last year and adjusted operating profit jumped 35% to £14.7m.   

According to Chairman Alex Hambro, the new financial year has “started well” and the firm is “well positioned to face the uncertain macro and political climate“. The recent 25% hike to the total dividend backs this up this statement. 

Assuming analysts are correct in predicting a 23% rise in earnings per share in 2019, Judges’s shares are changing hands on a P/E of just under 19. With rising returns on capital and improving free cash flow, I rate the shares as a cautious ‘buy’.  

Despite its memorable ticker, I still think music hardware and software product supplier Focusrite (LSE: TUNE) is a company that the majority of retail investors won’t have heard of. Considering its share price is now over 70% higher than it was two years ago, however, this market leader is clearly getting more attention than it used to. 

It’s not hard to see why.

April’s half-year figures (covering the six months to the end of February) included a 4.1% rise in revenue to £40.4m and a very encouraging 22.6% jump in pre-tax profit to £7.2m. The interim dividend was lifted 20% and the company had net cash of a little over £26m on its balance sheet at the end of the period. 

Trading on 29 times forecast earnings, prospective buyers of Focusrite’s stock will need to be confident that management’s strategies to deal with import tariffs in the US and ongoing economic and political uncertainty will be sufficient to stop the share price losing momentum. A number of product launches planned for this year should also help.

That said, I wouldn’t be tempted to jump on board at this price. For those already holding, banking some profit feels prudent.

Liontrust Asset Management (LSE: LIO) is my final pick of firms whose shares are hitting all-time highs. 

Despite some in the industry experiencing problems of late, shares in the business have been solidly rising for the last three years. Had you purchased Liontrust back in June 2016, you’d have a stonking gain of around 180% now.

As my Foolish colleague Harvey Jones reported recently, the company’s latest set of results were certainly encouraging considering “recent market bumpiness“. 

Compared to peers, Liontrust’s shares still look reasonably priced on 14 times predicted earnings. A forecast 3.9% yield makes it the highest dividend payer of the three covered today and it also has net cash on its balance sheet. 

While nothing can be guaranteed when it comes to future performance, particularly for companies whose success is so reliant on general market sentiment, I reckon the shares could be another cautious buy.

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Paul Summers has no position in any of the shares mentioned. The Motley Fool UK has recommended Focusrite and Judges Scientific. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

I think we can find the reason for the move in Chairman Alex Hambro’s statement regarding the outlook. Today’s figures sparkle, and he told us that the strong operational momentum continued into the second half of the year. He and the other directors expect earnings per share for the full year to be “ahead of current market expectations.”Ah! Those magical words so beloved of private investors and investing institutions across the length and breadth of the land.

Good progress

It’s been a year since I last wrote about the firm and progress since then has been stonking. I said back then that the business had “staged quite a comeback from the doldrums it found itself in 12 months ago.” Indeed, over a 12-month period, the stock had surged around 53% higher based on a strong recovery in earnings. I’m happy to report today that the firm has repeated the trick with the shares moving another 37% higher over the past year on the back of earnings that are exploding higher.

The strategy of acquiring and developing scientific instrument businesses is paying off. In the first half of the year, revenue moved 13% higher, cash from operations shot up 43% and adjusted earnings per share rocketed 52% higher. Once again, the firm’s growth is well balanced with cash inflow supporting advances in earnings. And it’s not all down to the firm’s acquisition activity either. The organic order book moved 2.3% higher and organic revenue made up 5.7% of the overall revenue advance.

It seems clear that Judges Scientific is doing many things right, and it finds its reward in a cash balance that is 35% higher than it was six months ago, at £14.4m, and in a net debt figure that has plunged 68% since Christmas down to just £2.4m. The firm admits that an “underlying favourable foreign exchange environment”  boosted profits, but the balance sheet is sound and I reckon that bodes well for the future.

A positive outlook

Looking forward, Alex Hambro said in today’s report that demand in the short term will likely be affected by currency fluctuations and “the ups and downs of government spending in various parts of the global market.” However, he asserts that there is a long-term positive trend driving the scientific sector. To me, that outlook statement suggests a potential opportunity for investors. If you are focused on a long-term investing horizon, I reckon Judges Scientific has proved its mettle and any short-term weakness in the share price because of a slip in earnings can be viewed as an opportunity to buy some shares at a better price. You only have to look back as far as 2016 to see how well such a strategy would have worked out recently. I think the firm is one to keep a close eye on.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Judges Scientific. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Attractive proposition

Judges Scientific owns 16 scientific instrument businesses, which are primarily UK-based but serve global niche markets, with long-term growth fundamentals. The group is listed on AIM and its shares are trading 4.6% higher at 2,270p, as I’m writing, on the back of today’s record results. Its market capitalisation is just under £140m.

It reported a 24.6% increase in revenue to £71.4m, including 17.7% organic growth, and a 55.5% rise in underlying earnings per share (EPS) to 131.9p. At the current share price, the price-to-earnings (P/E) ratio is 17.2. The performance was helped by “very favourable foreign exchange rates” but even so, the P/E looks cheap.

The company boasts a strong order book and has £10.7m cash on the balance sheet to help it pursue selective acquisitions, which are an integral part of its growth strategy. The businesses within the group can experience some short-term variability in performance but the long-term growth drivers make Judges an attractive proposition in my view.

Special situation

Although it counts familiar blue-chip names among its customers, packaging machinery specialist Mpac (LSE: MPAC) will be unknown to most readers. Until recently, this AIM-listed firm was called Molins. The change followed the disposal of the group’s tobacco machinery division and transfer of the Molins name.

I first tipped the company as a ‘special situation’ in June last year when the shares were trading at 101.5p. I put fair value at between 175p — based on pro forma net asset value (NAV) of £35.4m — and 197p. That latter figure was based on £51m forecast sales for the remaining business, valued at the same 0.78 times sales multiple at which the disposed-of business was sold. I upped my NAV estimate to £44.6m (221p a share) in November and suggested “the value on offer here could attract wider attention when the company releases its annual results (with a clean balance sheet) in early 2018.”

Those results showed revenue a little above forecast at £53.4m, giving a fair value of 207p a share on my 0.78 sales multiple, and NAV a little below my estimate at £42.8m, giving 212p a share. The shares are currently trading at 210p and the market cap is £42m.

Still value on offer?

The special situation has played out nicely but looking at the stock afresh, there still appears to be value on offer. According to Reuters, the consensus among City analysts is for EPS of 10.15p for the current year, followed by a 42% increase to 14.4p next year. This gives a P/E of 20.7, falling to 14.6, and a price-to-earnings growth (PEG) ratio of 0.35, which is well to the value side of the PEG fair value marker of one.

The company has net cash of £29.4m, a surplus of £17.6m on its UK pension scheme and deficit of £6.2m on its US one. However, there’s some risk due to the size of the gross pension assets and liabilities (both over £400m at the last reckoning), which potential investors should weigh up.

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G A Chester has no position in any of the shares mentioned. The Motley Fool UK has recommended Judges Scientific. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

With that in mind, here are two smaller companies which could realistically offer high returns in the long run. Both released updates on Monday and could be set to deliver rising share prices in future.

Improving performance

Scientific instrument specialist Judges Scientific (LSE: JDG) released a positive trading update for the 2017 financial year. It has seen strong demand for its products in the second half, with organic order intake increasing by 16% versus the prior year. This means that the company enters 2018 with a robust order book that totals almost 15 weeks of sales compared to almost 14 weeks at the same time last year.

Encouragingly, the two businesses within the group that had experienced lower demand in 2016 recovered to normal levels of orders, sales and profitability. The business, which had been affected by production and supply chain problems, has made progress, while wider group sales and profits were driven by a healthy order intake and favourable exchange rates. As such, it is anticipated that earnings for 2017 will be ahead of expectations.

Due to its positive update, the Judges Scientific share price increased by 6% on Monday. However, it continues to trade on a price-to-earnings growth (PEG) ratio of just 1.3. This suggests that it could offer upside potential from its current price level and may be worth buying for the long term.

Growth potential

Also reporting on Monday was aesthetics company Sinclair Pharma (LSE: SPH). It announced a trading update for 2017 which showed that sales increased from £37.8m in 2016 to £45.3m. This represented headline growth of 20%, with sales up 25% between H2 and H1. A modest EBITDA (earnings before interest, tax, depreciation and amortisation) is expected for the year as a while.

The restructuring of its European operations started to bear fruit during the year. Growth potential in Korea and in the Middle East also remains high in the long run, while the company remains upbeat about its potential to increase sales in the next 12 months.

With Sinclair Pharma forecast to return to a black bottom line in 2018, and then deliver 290% profit growth in 2019, now could be an opportune moment to buy it. The company appears to have a sound strategy which could provide solid growth for a number of years. Having a forward price-to-earnings (P/E) ratio of 9.5 using 2019’s forecast earnings figure, it appears to offer a wide margin of safety.

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Peter Stephens owns shares in Judges Scientific. The Motley Fool UK has recommended Judges Scientific. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The two founders have followed a simple yet powerful strategy. The company acquires niche leaders in scientific testing and measuring equipment at reasonable prices, before growing them under the decentralised Judges Scientific umbrella. Usually, it pays down any debt on the balance sheet to allow unencumbered growth, while also supplying the capital necessary for its businesses to maintain their market-leading positions. 

Cicurel has an uncanny knack of acquiring these businesses at dirt-cheap prices too and by my estimation is still finding great deals even in today’s bull market. 

The shares haven’t exactly had the best time of it in recent years, however. The demand for scientific testing equipment isn’t constant, resulting in some choppy results. 

On top of that, the shares are down 10% today at the time of writing after the company announced that Cicurel has sold 157,727 shares. That’s 2.58% of all outstanding shares. 

However, the fall seems overdone to me and I view this as a buying opportunity. After all, even after that sale, the CEO still owns 12.4% of the company. Investors are worrying that the top executive is selling ahead of bad news but I feel we owe him a little more faith, given his wonderful track record. 

40+ years of dividend hikes

What sort of a business can increase its dividend for more than 40 consecutive years? I’d expect many investors to suggest a utility, a pharmaceutical company or perhaps some other non-cyclical stock. I don’t think many would guess that James Halstead (LSE: JHD), a manufacturer of specialist flooring, would have managed it, but it’s true. 

It’s an impressive result for a company that essentially sells a commodity. When I spoke to the management team a year or so ago, it seemed clear that a tireless focus on cost control and quality of product had propelled the business for decades. 

Perhaps this culture was borne out of its family-run roots (the clue’s in the name). The company has, after all, boasted a net cash position every year since 1997. Last year, revenue grew 6.5%, with earnings per share rising 3.5%. The final dividend was hiked a greater 8.8% but still remained generously covered by earnings. 

Perhaps the most impressive aspect of the business is its profitability. It achieved a 19.6% operating margin last year. 

I keep a close eye on Halstead, but trading at a P/E of 25 I get the feeling investors could wait for a better entry point. In my view, the 10% fall in Judges makes it the better buy, although the track record of both these companies is to be admired.

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Today’s interim results from Judges Scientific (LSE: JDG) show that the firm has staged quite a comeback from the doldrums it found itself in 12 months ago.

It aims to acquire and develop scientific instrument businesses and today’s figures are impressive. Revenues elevated 20% compared to a year ago, and adjusted basic earnings per share surged back by just over 65%. The directors displayed their ongoing confidence in the outlook by pushing up the interim dividend by 11%, and the payout will be covered a comfortable five-and-a-half times by adjusted earnings.

Well-balanced progress

The financial recovery looks well-balanced. Cash from operations gushed more than 80% higher and the cash balance put on 48% to almost £9m helping to push net debt down by almost 44% to £5.8m. The balance sheet is in good shape with total borrowings running around twice the level of last year’s operating profit.

Around 14% of the revenue increase came from organic growth, which proves the company is not ‘manufacturing’ its progress with expensive acquisitions alone. However, buying other businesses, building them up and harvesting the added value is central to the firm’s strategy. So it’s encouraging to see the announcement of two post-period deals with the acquisition of Oxford Cryosystems for £4.5m and an increase in the firm’s share of Bordeaux from 51% to 75.5% costing £1.3m. Judges Scientific is putting some of its money to work by doing more of what it does best.

Strong order book

A strong order book makes the directors confident that full-year expectations will be achieved. City analysts expect earnings to elevate 30% this year and 16% during 2018, which looks like a decent rate of growth. At today’s 1,995p share price, the forward price-to-earnings (P/E) ratio sits just below 16 for 2018 and the forward dividend yield at almost 1.7%. I don’t think the valuation is excessive and I reckon we can expect a lot more from Judges Scientific.

Meanwhile, Gulf Marine Services (LSE: GMS) demonstrates with its interim results today that it is in an earlier stage of turnaround than we are seeing with Judges scientific.

The firm operates a fleet of self-propelled and self-elevating support vessels (SESVs) and the downturn in the oil and gas services industry sent earnings and the share price into decline over the past few years.

The carnage is evident in today’s results, which show revenue tumbling 47% compared to a year ago and adjusted diluted earnings per share plunging by 78%. The directors decided to preserve cash and axed the interim dividend completely – grim! Yet City analysts are optimistic that a recovery is around the corner and forecast a rebound in earnings for 2018.

High borrowings but…

There’s no doubt that borrowings are high at around £308m, which is almost twice the market capitalisation, but the tangible asset figure more than backs the debt. Ongoing cost-control measures and progress with new contracts should help the firm to keep up with interest payments. The directors reckon a secured backlog of work runs at £143m or so and tender activity in Europe and parts of the Middle East is good.

The share price hasn’t moved much today, suggesting the bad news is already in the price and the market has its eye on the future. I think ‘right now’ looks like a good time to run your slide rule over the firm.

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Kevin Godbold has no position in any of the shares mentioned. The Motley Fool UK has recommended Judges Scientific. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

Volvere (LSE: VLE) is Latin for “to turn about,” so it is fitting that this human-capital turnaround specialist makes this trio of turnaround speciailust. The company is run and owned by brothers Jonathan and Nicholas Lander, the CEO and CFO/COO respectively. Combined, the brothers own 39% of the company.

The brothers have spent their lives working in people-driven sectors like Law. These sectors often get a bad rap from investors because any competitive advantage is tied to the members of staff, who can easily defect to a rival, become demotivated, or retire.

The Landers love these businesses precisely because everyone else hates them. Typically, Volvere is approached by banks or the management teams of struggling businesses, placing it in a strong negotiating position.

The sheer number of businesses on offer allows management to be choosy, typically only indulging in one or two deals a year. By buying distressed businesses and fixing them up, the company has compounded book value at 14.4% p.a since 2002 for a total increase of 513%.

How? The process goes a little like this. The Landers identify a single-digit P/E company, which is often penniless or nearly so, pays down debts, injects cash, incentivises staff, then hopefully reaps the rewards of a successful turnaround.

Right now, Volvere is valued pretty much at book value, which means the market is placing no value on the Landers’ proven ability to create shareholder value. This looks too cheap to me, so the shares could be worth a second look.

Judges Scientific

Like Volvere, Judges Scientific (LSE: JDG) makes its living acquiring whole businesses. Unlike Volvere, the company invests for the very long term, aiming to grow assets organically after acquisition.

As the name implies, the company specialises in scientific testing and measurement equipment and is very choosy in acquiring the very best firms in this category. Since 2003, it has transformed from a £4m investment vehicle to a £111.5m business.

The company has struggled in recent years due to low levels of governmental research spend and lumpy orders, but I believe now could be a good time to invest. The company managed to acquire three companies last year, for mid single-digit P/Es. As long as these companies continue to perform adequately, that’s a bargain price. If they excel, Judges may look very underpriced in hindsight.

Deep value vs debt

Gulf Marine Services (LSE: GMS) operates a fleet of “self-propelled, self-elevating accommodation jackup barges,” which are essentially offshore oil maintenance ships with on-board accommodation quarters that allow a team to live and work on a rig easily.

With customers like Shell, Total and Saudi Aramco, clearly Gulf Marine Services is doing something right. The maintenance and engineering services provided by GMS are necessary come rain or shine, so a certain amount of business is guaranteed, but the combination of the oil price crash and a reduction in capex by oil majors has hurt it.

The shares have fallen nearly 50% since January 2015 as aggressive expansion plan suddenly became underfunded. Debt has ballooned to near-crisis levels.

While the company’s fleet expansion was costly, the ships are highly profitable once operational. The company makes 50% operating margins, indicating cashflow could increase drastically, maybe even double, once this flurry of investment ceases.

I believe the company could easily re-rate 20%-30% higher if business continues to be smooth.

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Zach Coffell owns shares in Judges Scientific. The Motley Fool UK has recommended Judges Scientific. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

With this in mind, I’m taking a look at two small-cap stocks with serious upside potential.

Buy and build

Scientific instrument specialist Judges Scientific (LSE: JDG) is a turnaround play which ambitious investors should keep an eye out for.

The core of the company’s business model is to buy and build a portfolio of scientific instrument businesses. Growth is being pursued by a combination of the pursuit of organic growth from existing businesses and through the acquisition of top-quality businesses with established reputations in specialist niches.

Although the past two years had been a tough time for the company, as growth in earnings and cash flow languished, the company is showing a number of signs that things could soon take a turn for the better. Despite a sluggish start to the year, trading picked up in the second half of 2016, with overall organic order intake up 2.9% compared with 2015.

Looking ahead, profitability is expected to improve as it addresses the production challenges in one of its businesses, which has primarily been the cause of the company’s recent weak financial performance. The company is also set to benefit from sterling’s relative weakness as the group earns a majority of its revenues from overseas, but its costs are predominately UK-based and are largely denominated in sterling.

What’s more, the long-term fundamentals of the scientific instrumentation sector remain intact, with demand likely to continue to grow due to increased investment in higher education and a growing trend towards optimisation across science and industry.

As City analysts expect the company to increase its earnings by 24% this year, investors would likely gain confidence in its turnaround prospects. Judges is currently attractively valued, with shares in the company trading at 15.2 times expected earnings this year (or 13.7 times expected earnings for 2018).

Infrastructure

Meanwhile, construction and engineering services company Renew Holdings (LSE: RNWH) could be set to benefit from an improving infrastructure spending outlook in the UK. The company has extensive expertise in the water, telecoms, transport and energy sectors and is well-placed to gain market share in the regulated infrastructure markets.

The company’s interim results this week show Renew is making solid progress. Revenue in the six months to 31 March 2017 increased 9%, while operating profit jumped by 14% to £12.1m. This enabled it to hike its interim dividend by 13% to 2.65p per share, giving its shares a current yield of 1.9%.

With management confident that it can lift the group’s operating margin to 4.5%, from 4.2% currently, I expect earnings to outpace revenue growth again this year. Renew seems reasonably priced, with shares in the company trading at 14.3 times expected earnings this year, which compares favourably to the sector average of 17.4.

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Jack Tang has no position in any shares mentioned. The Motley Fool UK has recommended Judges Scientific. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

A good year’s trading

Headline figures include revenue growth of 16.4% compared with the previous year, adjusted diluted earnings per share increasing 15.4%, and cash from operations up 7.1%. Gross borrowings rose around 60% to stand at just over twice the level of operating profits, which looks manageable.

The big question after such a stellar performance is — is there more growth to come? Chief executive Dr Drew Nelson sounds optimistic, putting the firm’s growth in revenues, profit and cash generation down to the company’s “cutting edge intellectual property”, which, he says, is delivering results through a “diverse range of growth engines.”

IQE has its sights set on what it describes as “global leadership across a range of markets”, arguing that advanced semiconductor materials, such as those IQE produces, are becoming an ever more important enabler of many electronics applications. Dr Nelson reckons the firm’s strategy, underpins this year’s strong financial performance and he sees an ”exciting” outlook for the business.

I can’t argue with the company’s operational and share price momentum, and wouldn’t want to bet against either. City analysts following the firm expect earnings to tick up a further 5% this year and 12% during 2018. meanwhile, at today’s share price around 51p, the forward price-to-earnings (P/E) rating for 2018 sits at just over 15. The company does not pay a dividend.

An improving outlook

The shares of scientific instruments company Judges Scientific (LSE: JDG) have also been bouncing around and are around 1% up as I write, as the firm reveals its full-year results today.

At first glance the results disappoint. Revenue rose 2% compared to the year before, but most other indicators that you’d want to be up are down. Adjusted operating profit plunged almost 24%, cash from operations tumbled 27%, cash on the balance sheet eased by 7% to stand at £7.9m and adjusted earnings per share caved-in by 22%. 

I reckon the market was expecting this poor trading and that the focus is on forward-looking positives, which include organic order intake up 2.9% compared to a year ago, and an increase in the organic order pipeline of 29%. The directors emphasised their confidence in the firm’s forward prospects by pushing up the full-year dividend by 10%.

Fair value?

Chairman Alex Hambro acknowledges that 2016’s trading performance was disappointing and points to the completion of four acquisitions during the year, a solid financial position, a strong order book, and positive order intake since the start of 2017 as reasons to be cheerful about the firm’s ongoing prospects.

At today’s share price of 1,582p, Judges trades on a forward P/E rating of 14.8 for 2018 and the forward dividend yield runs at 2.1%. City analysts following the firm expect earnings to grow around 18% this year and 7% during 2018 and to cover the dividend payout around 3.2 times. That’s not an excessive valuation and I’m comfortable sticking around to see what happens.

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Kevin Godbold owns shares in Judges Scientific. The Motley Fool UK has recommended Judges Scientific. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.