Sometimes the best clues about a company’s prospects come from the neighbours. This week, two of Weir Group PLC's (LSE:WEIR) closest rivals, Sandvik and Metso, offered a helpful read-across, and the signs look good for the Glasgow-based engineer.
Sandvik kicked off with third-quarter results showing strong demand from the mining sector, where Weir does most of its business. Orders jumped 16% at constant exchange rates, led by the mining division.
Margins were a touch lower thanks to currency effects and higher costs, but the top line was solid enough to lift Sandvik’s shares nearly 4% on the day.
Then came Metso, whose update sent its stock up almost 13%. Orders rose 2% year on year to €1.26 billion, with the minerals business, the one most comparable to Weir’s, up 1%.
Services accounted for 65% of total orders, signalling resilient aftermarket demand, while an EBITA margin of 17.8% showed decent discipline despite cost pressures.
Panmure Gordon reads both updates as encouraging for Weir, suggesting that the mining upcycle still has legs and that demand for spares, servicing and upgrades remains strong.
These high-margin aftermarket sales account for a large slice of Weir’s revenue and help steady earnings even when capital spending wobbles.
The broker expects Weir to reach its target 20.1% operating margin in 2025, a year ahead of plan, and to keep improving thereafter.
Cost and currency headwinds remain, but Panmure argues that the group’s mix of engineering expertise and sticky service revenues makes it one of the sector’s steadier plays.
At about 2,922p, the shares trade on 24 times 2025 earnings and 21 times 2026, not cheap, but fair value for a company still climbing out of the mining downturn with cash flow and confidence intact.