The sporadic nature of Renold’s (RNO) appearances in Investors’ Chronicle tells its own tale of the company’s fortunes. The company was a mainstay until five years ago, but the revelation in July 2019 that it had been overstating profits for the past three years sent its shares tumbling, and our interest waned.
Tip style
Value
Risk rating
High
Timescale
Long Term
Bull points
- Excellent progress on profit margins
- Very cash generative
- Balance sheet improving
- Dividend reinstated
Bear points
- Organic growth is unimpressive
- Big pension deficit
- Share price has already jumped
Renold’s debt had already been climbing as a result of a new factory in China and it was wrestling with a huge pension liability, so when the Covid-19 outbreak threatened to disrupt earnings further investors feared it was circling the drain. The company, which had been making chains since 1864, briefly saw its market capitalisation slip below £10mn.