Gooch & Housego PLC

Overview

This report analyzes Gooch & Housego PLC (LSE: GHH) through the lens of William J. O’Neil’s CAN SLIM methodology, integrating the provided structured financial data to assess earnings power, price/volume action, leadership, and institutional/supply-demand dynamics to inform a data-driven investment stance.

Financial and Business Overview

Gooch & Housego is a UK-based photonics and electronic components company serving technology end-markets, commonly including aerospace/defense, life sciences, and industrial laser applications. Financially, the stock trades at 534p with a market cap of about £156m and pays a dividend of roughly 13p per share (~2.5% yield). Profitability appears to be recovering: trailing EPS is ~20p (TTM P/E ~26.7x), with current-year EPS expected around 36.5p and forward EPS ~38.1p, implying a forward P/E near 14.0x (534p / 38.07p). Balance sheet quality looks solid on a book-value basis: book value per share is ~£4.29 and the stock’s price-to-book is about 1.25x when computed from price and book value (the provided priceToBook field appears mis-scaled). The dividend payout ratio is elevated versus TTM EPS (~65%), but looks more comfortable (~34%) against forward EPS. Liquidity is modest (avg 3-month volume ~59.7k shares/day; 10-day ~39.6k), typical of a UK small-cap, implying wider trading spreads and potentially sharper moves on news.

Market Position & Competitive Advantages

G&H operates in specialized, engineered photonics niches where technical know-how, precision manufacturing, and deep customer relationships can create durable moats and switching costs. The company’s exposure to structurally supported verticals (e.g., aerospace/defense, medical/life sciences) can provide multi-year program visibility when execution is strong. Risks: cyclical industrial demand (especially industrial lasers), project timing and mix affecting margins, potential customer concentration, FX exposure (GBP vs USD/EUR), supply chain complexity in optics/photonics, and small-cap liquidity. Execution on margin recovery and growth programs is key to translating the expected EPS uplift into durable shareholder returns.

Stock Performance

Price is 534p, up ~10.6% over the past 52 weeks, +52% off the 352p 52-week low, and ~19% below the 660p 52-week high. Shares are above the 200-day moving average (200-DMA ~515p; +3.8%) but below the 50-day (50-DMA ~560p; −4.6%), indicating intermediate-term consolidation within a longer-term recovery. Recent demand looks subdued: 10-day average volume (~39.6k) trails the 3-month average (~59.7k), suggesting limited near-term accumulation. Next potential catalyst is the scheduled earnings/communication window around 3 June 2025.

CAN SLIM Analysis

Conclusion

Fundamentals point to an earnings recovery (TTM EPS ~20p rising toward ~36–38p) and a reasonable forward valuation (~14x) with a ~2.5% dividend yield. However, the stock sits below its 50-DMA and ~19% under its 52-week high, recent volume is light, and we lack confirmation on quarterly EPS acceleration and institutional sponsorship—key CAN SLIM pillars. Maintain on watch. A higher-probability O’Neil-style entry would be a decisive breakout above resistance (e.g., a strong move reclaiming the 50-DMA and ideally clearing ~600–605p or forming a proper base) on volume ≥40–50% above average, in a confirmed market uptrend. If buying a breakout, use a disciplined 7–8% stop-loss from the purchase price. Reassess if the June 2025 update confirms accelerating EPS and margins.