If Melrose Industries PLC (LSE:MRO, OTC:MLSPF) was trying to offer investors a gentle end-of-week tune-up, Friday’s trading statement did the job.
The shares barely budged on the day, but Peel Hunt argued the update was better than it looked at first glance, highlighting a pick-up in organic growth that supports expectations for next year.
The engineering group reaffirmed its full-year guidance, but the more interesting detail sat beneath the headline.
Revenue rose 14% in the four months from July to October, well ahead of the 6% pace logged at the half-year stage.
The Engines division powered ahead with 28% growth, up from 11% at the interim mark, while Structures delivered 5%, compared with 3% earlier in the year.
Peel Hunt notes that its 2026 growth estimates, 10% for Engines and 5% for Structures, look well underpinned on this trajectory.
Cash guidance was light, though the company reiterated expectations for free cash flow north of £100 million. The broker’s own model sits at £88 million and it was encouraged by the shift within Engines: original equipment revenue rose 35% over the period, versus 7% at the half year, suggesting supply chain constraints are easing.
Aftermarket sales grew 22%, slowing slightly from 15% earlier in the year but still healthy.
On valuation, Peel Hunt maintains its 790p target price, equivalent to about 13 times expected 2026 EBITDA.
That compares with a peer group closer to 15 times, while a sum-of-the-parts assessment lands at a more generous 830p. The broker reiterated its 'buy' rating, arguing that momentum into 2026 remains intact.