Flyover Stock: Rotork plc (ROR.L)
For nearly 70 years, this U.K.-based company has helped global industry flow more efficiently with its mission-critical products.
Executive summary
Rotork has true global reach, with only about 10% of its revenue coming from its home market in the U.K. and no country accounting for more than 20% of revenue.
After years of sluggish growth, Rotork has a fresh leadership team that’s laid out a growth strategy that’s already starting to show results.
Rotork’s mission-critical products are well positioned to capitalize on the energy transition as well as continued global investment in fossil fuels.
As I mentioned in my year-end post, it’s been over a year since I profiled a non-US company, so I’m starting 2025 by remedying that oversight.
Though it’s been nearly 15 years since I lived and worked in the U.K., during my time there I was introduced to a number of high-quality U.K. based companies that I’ve kept tabs on over the years.
One of them is Rotork plc (ROR.L), which I listed as a “stock to watch” in this article from April 2024. Below is my summary of Rotork from that post:
Rotork sells and services mission-critical flow control instruments and systems to three major end markets: oil & gas (46% of 2023 revenue), water & power (24%), and chemical, process, and industrial (30%).
Approximately 75% of Rotork’s sales come from orders below £100,000; 25% are below £10,000. These tickets are a low percentage of the cost of a massive energy or industrial project where the cost of failure is high. Once installed, it’s unlikely that customers would switch out a Rotork actuator on price alone when it came time for a replacement.
At first glance, you may be reasonably concerned about Rotork’s oil and gas exposure, but it has several secular tailwinds. Among these are water and wastewater infrastructure investments and helping oil and gas customers reduce methane emissions by switching from pneumatic to electric actuators.
Encouragingly, management’s long-term bonus metrics include rolling three-year ROICs. The company targets high-single-digit revenue growth along with mid-20s operating margins. It has a net cash balance sheet and has grown its dividend yearly for over twenty years. All told, it’s a solid operator that isn’t a well-known name among quality investors outside the U.K.
In today’s profile, I will dig deeper into these points and provide a more comprehensive analysis of Rotork, including moat, management, and valuation overviews.
Paid subscribers, your content continues below.
Todd Wenning is the founder of KNA Capital Management, LLC, an Ohio-registered investment advisor that manages a concentrated equity strategy and provides other investment-related services.
At the time of publication, Todd, his immediate family, and/or KNA Capital Management, LLC or its clients did not own shares of any company mentioned above this point in the article.
Please see important disclaimers.