Yahoo Finance 
STOCKS NEWS EUROPE-Smiths rallies after special div, results
Shares in British engineering company Smiths Group (LSE: SMIN.L - news) rise 3.5 percent to top the list of European risers and are on track for their highest close in two-and-a-half years after announcing a special dividend of 30 pence per share in their full-year 2013 results.
Trading volumes in Smiths Group come in above the average for the rest of the broader market. Volumes on Smiths stand at 63 percent of the usual 90-day amount, while volumes on Britain's FTSE 100 (FTSE: ^FTSE - news) index come in at 19 percent of its usual 90-day amount.
The company, which makes mechanical seals, power transmission couplings, medical devices and equipment to detect explosives, reports that operating profit rose marginally to 560 million pounds ($890.54 million) in the year ended July 31 from 554 million pounds a year earlier. Revenue rose 2 percent to 3.1 billion pounds.
"Smiths' results are slightly better than we expected," Investec (LSE: INVP.L - news) writes in a note, repeating its "buy" rating. Six out of 19 analysts have a "buy" rating on Smiths, while 8 have a "hold" rating, according to Thomson Reuters StarMine data.
"The group already generates good margins and it is pushing to raise them further. The rating fails to reflect the quality of the group and perhaps the 30 pence special dividend will act as a reminder," it adds, while raising its target price to 1,590 pence from 1,500 pence.
Despite nearing its all-time closing high of 1,429, Smiths trades on a market implied forward five-year earnings per share growth of 2.7 percent, compared with a StarMine implied projection of 5.2 percent, suggesting investors are undervaluing the company.
Smiths' shares would have to rise a further 10 percent to meet StarMine's estimated intrinsic value of 1,568 pence, which is what StarMine believes the company's stock should trade at based on its most likely growth trajectory over the next decade or more, with steady growth assumed after that.
Reuters messaging rm://david.brett.thomsonreuters.com@reuters.net
