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Trust Worldwide (ASX:RWC) is a company I like and the recent drop in its share price due to the broader market reaction to the SVB collapse. i like it even more In the construction industry, you will experience the ups and downs of the construction industry, which inevitably goes through its boom and bust periods.
Management has done the right thing to shareholders by returning excess capital and not issuing excessive amounts of shares since the company’s listing in 2016. For a manufacturer/supplier in this space, they are conservatively positioned with a net gearing of 55%. They’ve stuck to their guns, and management hasn’t decided to buy a movie studio or start making electric vehicles or anything stupid like that.
RWC is engaged in the design, manufacture and supply of high quality, reliable and premium branded water flow, control and monitoring products and solutions for the plumbing and heating industries. They expanded this offering in the US with the acquisition of EZ-Flo. This acquisition is yet to be decided and time will tell if they are right, but early signs are looking good!
RWC’s quality is beginning to show itself in a construction industry that is currently experiencing a downturn.
RWC’s stock ranking is up 11 to 86 over the last 30 days, quality is up 9 and momentum is up 17 to 77. Additionally, RWC has essentially maintained its super stock ranking over the past 4 years.
This is reflected in the overall quality of this consumer discretionary business.
RWC increased sales revenue from $453 million in FY2017 to $1.1 billion in FY22. The increase in sales led to higher profits. Profits increased from $49.9 million to $137 million over the same period, with profits peaking in FY21 at $141 million.
However, in FY22, RWC’s earnings and cash flow declined. This is mainly due to increased input costs (raw materials…