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Judges Scientific rewards our confidence with record results

Judges Scientific (JDG:AIM) £102
Gain to date: 3.2%
We recommended shares in ‘buy and build’ scientific instrument maker Judges Scientific (JDG:AIM) in February based on the firm’s ability to generate solid earnings growth and the long-term trends underlying its business.
WHAT HAS HAPPENED SINCE WE SAID BUY?
In March, the company posted record revenue of £136 million for 2023, a 20% increase on the previous year, and record operating profit of £34.8 million, up 16% on the previous year.
This momentum has continued into 2024 with the underlying order book standing at 17 weeks thanks to robust global demand and the easing of supply chains.
Most impressively, Judges increased its total dividend per share by 17% to 95p, which was the actual offer price when the firm came to the market back in 2003, reflecting what Liberum analyst Sanjay Vidyarthi called the firm’s ‘formidable track record of growth, free cash flow generation and return on capital’.
The group’s strategy today remains the same as it was 20 years ago – to create attractive returns through highly selective, carefully structured acquisitions financed by the solid and growing earnings and cash flow from its existing businesses.
Management is confident it will meet forecasts for this year even without a new contract for the Geotek coring business, which was acquired in May 2022 and over-delivered last year, although this means if there is positive news from Geotek there is scope for earnings upgrades.
WHAT SHOULD INVESTORS DO NOW?
The latest announcement from the company may have sparked some profit taking but the long-term fundamentals supporting demand for scientific instruments and related services remain positive, driven by the growth of higher education and the need for scientific research across academic, corporate and industrial sectors, and we would stick with Judges.
Given its equipment includes embedded software, there is potential to deploy AI (artificial intelligence) to improve the user interface which we believe would make its offering even more attractive and could enhance future margins.
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