Latchways stays on research list

Here comes Latchways (LTC), taunting me again with its full-year results, flaunting its balance sheet, and its fancy market valuation.

Its PE is about 16, and its PB is about 4, which means I didn’t consider it for the Thrifty 30 portfolio almost a year ago.

But I’ve changed the way I assess the market value of companies posting high returns year-after-year, so I should look at Latchways again.

High levels of profitability, no debt and the fact that ever since it invented the Transfastener in 1982 it has fulfilled a useful function providing workers up towers, masts and ladders, and on roofs and aeroplane wings, with cables, harnesses and latches makes it a candidate for the Thrifty 30, at the right price.

Most of the key metrics moved up in 2011/12, but not as fast as they did in the recovery period post credit crunch or the period of rapid growth before it. Latchways continues to diversify its product range with a Personal Rescue Device which, rather than leaving a fallen worker dangling, allows him to pull a rip cord, releasing a brake mechanism and lowering him gently to the ground.

It’s increased the sales and marketing team by 30% to support expansion beyond commercial construction in the UK, Europe and the USA, and into military and industrial markets in anticipation of growth to come and as a defence against possible contraction in the traditional market for cable-based systems.

The chairman, chief executive and finance director all joined the board in the second-half of the nineties, when earnings per share was as low as two or three pence. Today the company announced eps for the year of 66p.

More than enough to justify putting the numbers in a big spreadsheet to see what comes out.