Company Reports

Smiths Group has completed its transformation into a focused industrial technology company built around two core businesses, John Crane and Flex-Tek, which specialize in engineered flow and heat management solutions. These divisions operate in attractive, noncommoditized niches where performance, reliability, and service support are critical to customers. Both have strong positions in markets shaped by long-term drivers such as energy security, industrial efficiency, aerospace growth, and digital infrastructure investment.

Smiths Group delivered 1.2% organic revenue growth and a 20.6% operating margin for fiscal 2026 while completing the Interconnect and Detection disposals. Management guides to about 4% organic growth and a roughly 21% margin in fiscal 2027.

Smiths Group has completed its transformation into a focused industrial technology company built around two core businesses, John Crane and Flex-Tek, which specialize in engineered flow and heat management solutions. These divisions operate in attractive, noncommoditized niches where performance, reliability, and service support are critical to customers. Both have strong positions in markets shaped by long-term drivers such as energy security, industrial efficiency, aerospace growth, and digital infrastructure investment.

Smiths Group cut full-year organic revenue guidance to about 2% from 3%-4% after Middle East disruption hit John Crane, but raised operating margin guidance to slightly above 20% as cost actions offset weaker sales.

Smiths Group is reshaping itself into a focused industrial technology company built around two world-class businesses—John Crane and Flex-Tek—that specialize in engineered flow and heat management solutions. These divisions operate in attractive, noncommoditized niches where performance, reliability, and service support are critical to customers. Both have strong positions in markets shaped by long-term drivers such as energy efficiency, industrial decarbonization, and electrification.

Smiths Group agreed to the sale of Smiths Detection (GBP 2.0 billion) and Smiths Interconnect (GBP 1.3 billion enterprise value) at multiples ahead of expectations. Continuing operations grew 0.4% organically, and group organic revenue grew 4% in first-half fiscal 2026.

Smiths' first-quarter 2026 trading update saw organic revenue growth of 3.5%, driven by double-digit growth from detection. The GBP 1.3 billion proceeds from the sale of interconnect will be returned to shareholders via a new GBP 1 billion buyback program to be completed at the end of calendar 2026.

Smiths Group is reshaping itself into a focused industrial technology company built around two world-class businesses—John Crane and Flex-Tek—that specialize in engineered flow and heat management solutions. These divisions operate in attractive, noncommoditized niches where performance, reliability, and service support are critical to customers. Both have strong positions in markets shaped by long-term drivers such as energy efficiency, industrial decarbonization, and electrification.

Smiths Group delivered another year of strong performance, with fiscal-year 2025 results exceeding guidance across key metrics. Organic revenue growth of 9% landed above the upgraded 6%-8% range, while operating margin expanded to 17.4%, at the top end of management’s guidance.

Smiths Group is reshaping itself into a focused industrial technology company built around two world-class businesses—John Crane and Flex-Tek—that specialize in engineered flow and heat management solutions. These divisions operate in attractive, noncommoditized niches where performance, reliability, and service support are critical to customers. Both have strong positions in markets shaped by long-term drivers such as energy efficiency, industrial decarbonization, and electrification.

We take a fresh look at Smiths Group. Smiths is evolving into a focused industrial business, centered on two core divisions—John Crane and Flex-Tek—that provide engineered flow and heat management solutions to the energy, industrial, aerospace, and HVAC markets.

Smiths Group is reshaping itself into a focused industrial technology company built around two world-class businesses—John Crane and Flex-Tek—that specialize in engineered flow and heat management solutions. These divisions operate in attractive, noncommoditized niches where performance, reliability, and service support are critical to customers. Both have strong positions in markets shaped by long-term drivers such as energy efficiency, industrial decarbonization, and electrification.

Smiths posted 10.6% organic sales growth in the third quarter of 2025, lifting year-to-date growth to 9.6%. Management now expects full-year sales at the top of the 6%-8% range and reaffirms its 40 to 60-basis-point margin expansion.

Wide-moat Smiths Group reported a solid set of first-half fiscal 2025 results, underpinned by strong organic growth and improved profitability. Organic revenue rose by 9% while operating margin expanded 50 basis points to 16.7%, driving a 9.5% increase in reported operating profit to GBP 269 million. We maintain our GBX 2,030 fair value estimate, suggesting the stock is trading in fair value territory.

We resume coverage of Smiths Group with a fair value estimate of GBX 2,030 and a wide economic moat rating. We assign Smiths Group a Medium Uncertainty Rating and a Standard Capital Allocation Rating. Smiths Group is a collection of four distinct capital goods businesses that supply a range of mission-critical industrial equipment and associated aftermarket services. While serving customers in disparate market verticals—which include the oil & gas, aviation & defense industries as well as the general industrial sector—Smiths Group’s stable of global capital goods businesses are united by similar business models, engineering expertise, and leading market positions in the capital goods niches they serve. Smiths Group shares screen as undervalued, trading at a 15% discount to our valuation.

Smiths Group is a collection of four distinct capital goods businesses that supply a range of mission-critical industrial equipment and associated aftermarket services. While serving customers in disparate market verticals—which include the oil and gas, aviation & defense industries as well as the general industrial sector—Smiths Group’s stable of global capital goods businesses are united by similar business models, engineering expertise, and leading market positions in the capital goods niches they serve.

We will discontinue analyst coverage of Smiths Group plc on or about Feb. 22, 2024. We provide analyst research and ratings on over 1,500 companies globally and periodically adjust our coverage according to investor interest and staffing.

Smiths Group is a collection of industry-leading niche businesses, each producing admirable margins and returns; however, growth across the group is inconsistent, with different divisions enjoying periods of strong demand but at disparate times. Research and development spending as a portion of sales has increased by 50 basis points over the past few years. However, to accelerate group-level revenue growth, several innovation winners—not a single one—are likely necessary, given the breadth of products across the businesses. The innovation cycle for each business is also likely several years, and the fruits of the recent ramp-up in spending have yet to be seen. That said, a few of these product categories, particularly in security and safety, have emerging technology potential that could lead to new market opportunities. Management sees a potential GBP 200 million-GBP 250 million in gross new revenue opportunities in the medium term. The net number will probably be lower after taking into account cannibalization of existing products by new product rollouts.

Narrow-moat Smiths Group's late-2023 performance was impressive, resulting in full-year 2023 organic revenue growth of 11.6%, eclipsing its most recent guidance of 10%. Consequently, Smiths Group’s delivery of full-year EBIT of GBP 501 million tracked 5% ahead of our forecast. Operating margins expanded 20 basis points to 16.5%, also in line with management's expectation of moderate margin expansion. Following a bumper year in 2023, Smiths Group expects organic revenue growth to slow in 2024—guiding in the range of 4% to 6%, in alignment with its medium-term target range—while also expecting modest profit margin expansion. We are yet to update our financial estimates to reflect Smiths Group’s revised guidance and other recent developments. Nonetheless, we maintain our fair value estimate of GBX 1,700.

Smiths Group is a collection of industry-leading niche businesses, each producing admirable margins and returns; however, growth across the group is inconsistent, with different divisions enjoying periods of strong demand but at disparate times. Research and development spending as a portion of sales has increased by 50 basis points over the past few years. However, to accelerate group-level revenue growth, several innovation winners—not a single one—are likely necessary, given the breadth of products across the businesses. The innovation cycle for each business is also likely several years, and the fruits of the recent ramp-up in spending have yet to be seen. That said, a few of these product categories, particularly in security and safety, have emerging technology potential that could lead to new market opportunities. Management sees a potential GBP 200 million-GBP 250 million in gross new revenue opportunities in the medium term. The net number will probably be lower after taking into account cannibalization of existing products by new product rollouts.