TP Group PLC (LON:TPG) continues its evolution from a cash-hungry research and development house to a Tier 2 specialised services and engineering company. The increased maturity allows us to apply a developed view of fair value with a more specific peer group SOP combined with a DCF. It currently returns 9.11p, implying significant potential for investors.
Developing the Tier 2 status
Having achieved a more rapid improvement in financial performance than was originally anticipated, TP Group is progressively extending its capability as a Tier 2, defence-led specialised services and engineering business. As it is more agile than Tier 1 and prime contractors, but better able to respond to complex requests in a focused way than disparate component and assembly suppliers, management will seek to enhance development through selective M&A as well as organic growth. As TP Group is essentially following a previously tried and tested value path, we believe management is positioned to deliver increasing returns to shareholders.
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