Richard wrestles with the conundrum that is Goodwin, a company selling off its biggest and most profitable division. MS International and Northern Bear also feature.
5 Strikes
Since my last update seven companies have passed my minimum quality filter and published annual reports.
| Name | TIDM | Prev AR | Strikes | # Strikes |
|---|---|---|---|---|
| GDWN | Goodwin | 28/8/26 | ? CROCI ? Growth ? ROCE | 2 |
| SYS1 | System1 | 25/8/26 | ? Holdings – CROCI – Growth – ROCE | 3 |
| BTG | BTG Consulting | 18/8/26 | ? Acquisitions ? CROCI – ROCE – Shares | 3 |
| DGE | Diageo | 18/8/26 | ? Holdings – Debt – Growth ? ROCE | 3 |
| MSI | MS International | 17/8/26 | – CROCI ? Growth ? ROCE | 2 |
| PZC | PZ Cussons | 14/8/26 | – Holdings – Growth – ROCE | 3 |
| NTBR | Northern Bear | 12/8/26 | – CROCI ? Growth ? ROCE | 2 |
| Click here for our 5 Strikes explainer | 01/09/2026 | |||
Three, Goodwin, MS International and Northern Bear achieved less than three strikes when I examined their financial histories in ShareScope.
Goodwin [? CROCI ? Growth ? ROCE]
Developments at Goodwin (See Goodwin’s What We do page for descriptions of its many capabilities) exposes the limits of any semi-mechanical way of screening for shares. An unknowing reading of the data would lead us to the wrong conclusion.
I gave Goodwin a question mark for CROCI, a question mark for Growth and a question mark for ROCE.
Free cash flow for the firm, and hence Cash Return On Capital Invested from which the metric is derived, has been negative once in the last eight years, but only by less than £1 million in 2019..;
Even a question mark is harsh given that the reason for the spending was investment. Specifically the company was enlarging its foundry so that its Mechanical Engineering division could cast steel alloys in much greater quantities. This investment has paid off spectacularly.
It serves to remind us that cash flows from the manufacture of large steel components for ships, spent nuclear fuel containers and oil pipelines can be irregular.
The reminder is also, probably, moot. Goodwin has put its Mechanical Engineering division up for sale, and it is confident enough that the sale will go through in the current financial year that it reported the division’s revenues, assets, and cash flows as discontinued in the annual report for the year to April 2026.
By calving off the discontinued items in accordance with financial regulations, the accounts show investors how the business they will own in future has performed in 2025 and 2026. Goodwin’s profit and loss account (consolidated statement of comprehensive income) shows only revenue, costs and profit relating to the continuing businesses and these are the figures used by ShareScope.
Since turnover in 2025 and 2026 excludes the discontinued items, 2025 now shows a sharp decline in turnover:
Turnover for the continuing operation fell 66% in 2025 compared to the whole business including Mechanical Engineering in 2024.
The unknowing conclusion would be Goodwin had a terrible year in 2025 and experienced sub-par 2% growth in 2026. It is far from the truth. Some discontinued items are disclosed in the notes and we can add them back. Turnover grew 15% in 2025 and 27% in 2026.
Obviously most of that growth was in the discontinued Mechanical Engineering division, which at the time of writing, Goodwin still owns and operates.
I mentioned that Goodwin’s investment in its foundry had paid off spectacularly. It is more complicated than that, though, the larger foundry allowed it to reposition itself as a supplier to the nuclear industry and navies, customers it has painstakingly developed new relationships with.
Although for much of the last decade Mechanical Engineering has vied with Refractory Engineering to be the main contributor of profit, in recent years it has pulled ahead dramatically again.
In 2026 Mechanical Engineering’s operating profit increased by 174%. Total operating profit increased 112%
This creates a conundrum. The sale of Mechanical Engineering will shrink the business. It will have much lower turnover. Since its biggest source of revenue will have gone, the future will not resemble the past, and the past may be of little use as a guide to the future.
Since 5 Strikes relies on the notion that the past can be a guide to the future, Goodwin may be an exception. Shareholders must put a lot more trust in management, that their motives are pure and they know what they are doing.
However the company is not a dud! It may be even better in its new guise. Goodwin should get a very good price for Mechanical Engineering because it is thriving.
Investors will be rewarded. Some of the loot will be returned to us (I am a shareholder). The rest will fund the continuing operation, which may well grow strongly from its new base line.
The continuing operation is Goodwin’s other historic division: Refractory Engineering, which owns a number of niche mineral refining businesses. While smaller than Mechanical Engineering, it has sometimes earned more profit.
It also comprises a new division, Technologies, carved out of Mechanical Engineering. The most significant bit of this division is a loss-making startup, Duvelco. Duvelco makes Ducoya, a novel high performance polymer on the cusp of commercialisation.
The third 5 Strikes question mark is Return on Capital Employed. I like ROCE to exceed 10% in each of the last eight years, and may award a strike if it falls below that level. Goodwin’s ROCE was 9.8% in 2020 according to ShareScope, which really would be splitting hairs.
ROCE in 2025 and 2026 was either side of 6% according to ShareScope. I don’t trust this figure. ShareScope uses average capital employed for the current year and the prior year to calculate ROCE, but the balance sheet numbers for 2025 are for the whole business. Capital employed may be inflated.
Return on year end capital employed in 2026 for the continuing operation, including loss-making Technologies was 10%.
I haven’t finished with Goodwin this year. But barring these comments on the 5/ criteria, I am reserving my judgment for Interactive Investor, because the company is a member of the Share Sleuth model portfolio I run for the investing platform.
MS International [- CROCI ? Growth]
MS International is mainly a manufacturer of naval cannon and counter-drone systems. Its MSI Defence division has done very well over the last five years due to high demand. In the year to April 2026, though, divisional turnover fell from £82 million to £72 million, contributing to an overall 2% decline in turnover – hence the question mark against growth.
The contraction, MSI, says was due to worldwide delays in defence procurement decisions as governments reassess their defence priorities.
Like Goodwin, MSI has reviewed its strategy, but unlike Goodwin it is not selling off its biggest and most profitable division. The company has been seeking buyers for its other business though. It also manufactures forgings (for example forklift forks) and petrol station superstructures and branding.
MSI says it has received an unsolicited offer for the forgings business and encouraging interest from potential buyers for the petrol station business. Negotiations are not sufficiently advanced, though, for it to be confident sales will happen, so both divisions are included as continuing operations.
The CROCI strike is for negative cash flow in 2020, 2022, 2023 and 2025.
Northern Bear [- CROCI ? Growth ? ROCE]
I know next to nothing about Northern Bear, so be warned. The company is a gaggle of small building services companies operating in the North of England. Typically, the company says, 85% of its revenue is recurring contracts, although the 2026 annual report emphasises that non-recurring project work has contributed to recent growth
My harshest judgement may be the question mark against ROCE. In most years it has been very profitable, stumbling only in the years to March 2021 and March 2022, which of course coincide with the COVID pandemic.
Growth and cash flows have been more episodic, but also generally positive.
All the 0’s, 1’s and 2’s
So far in 2026, 83 shares have received less than three strikes. I have given 13 shares no strikes, 26 shares one Strike and 44 shares two strikes.
| Name | TIDM | Prev AR | Strikes | # Strikes | Link |
|---|---|---|---|---|---|
| CER | Cerillion | 12/1/26 | 0 | > | |
| HWDN | Howden Joinery | 25/2/26 | ? Holdings | 0 | > |
| PRV | Porvair | 11/3/26 | ? Holdings | 0 | > |
| NICL | Nichols | 23/3/26 | 0 | > | |
| MGNS | Morgan Sindall | 24/3/26 | 0 | > | |
| QTX | Quartix | 25/3/26 | ? ROCE | 0 | > |
| CCC | Computacenter | 8/4/26 | 0 | > | |
| FOUR | 4imprint | 14/4/26 | ? Holdings | 0 | > |
| KEYS | Keystone Law | 13/5/26 | 0 | > | |
| AUTO | Autotrader | 8/6/26 | 0 | > | |
| TAM | Tatton Asset Management | 16/6/26 | 0 | > | |
| CWK | Cranswick | 30/6/26 | ? Growth | 0 | > |
| KNOS | Kainos | 24/7/26 | ? Growth | 0 | |
| BOWL | Hollywood Bowl | 5/1/26 | – Debt | 1 | > |
| MEGP | Me Group | 23/3/26 | – Growth ? ROCE | 1 | > |
| ALFA | Alfa Financial Software | 24/3/26 | – Growth | 1 | > |
| INCH | Inchcape | 24/3/26 | – Growth | 1 | |
| GAMA | Gamma Communications | 24/3/26 | ? Acquisitions – Holdings | 1 | > |
| ROR | Rotork | 27/3/26 | – Holdings ? Growth | 1 | |
| RMV | Rightmove | 30/3/26 | – Holdings | 1 | |
| CKN | Clarkson | 30/3/26 | ? Growth – ROCE | 1 | |
| IMI | IMI | 31/3/26 | ? Holdings – Debt ? Growth | 1 | |
| FDM | FDM Group | 10/4/26 | – Growth | 1 | > |
| HILS | Hill & Smith | 10/4/26 | – Holdings ? Acquisitions | 1 | |
| NXT | Next | 16/4/26 | – Debt | 1 | |
| BAG | Barr (AG) | 21/4/26 | ? Acquisitions ? Growth | 1 | |
| SAG | Science | 21/4/26 | ? Growth | 1 | |
| ELCO | Eleco | 9/5/26 | – Holdings ? Growth | 1 | |
| LSC | London Security | 15/5/26 | – Holdings | 1 | |
| W7L | Warpaint London | 22/5/26 | – Shares ? Growth | 1 | |
| PETS | Pets at Home | 9/6/26 | – Holdings ? Growth | 1 | |
| BMY | Bloomsbury Publishing | 19/6/26 | – Growth | 1 | > |
| HLMA | Halma | 24/6/26 | ? Holdings ? Acquisitions | 1 | |
| XPS | XPS Pensions | 13/7/26 | ? Holdings ? Debt | 1 | |
| LTHM | Latham (James) | 23/7/26 | – CROCI ? Growth | 1 | |
| GAW | Games Workshop | 28/7/26 | ? Holdings | 1 | |
| JET2 | Jet2 | 3/8/26 | ? Holdings ? CROCI ? Growth ? ROCE | 1 | |
| CBOX | Cake Box | 5/8/26 | ? Acquisitions – Debt | 1 | > |
| CFX | Colefax | 12/8/26 | ? Growth | 1 | > |
| RWS | RWS | 8/1/26 | ? Acquisitions – Growth – ROCE | 2 | > |
| IHP | IntegraFin | 9/1/26 | – CROCI | 2 | |
| RFX | Ramsdens | 15/1/26 | – CROCI ? Growth ? ROCE | 2 | > |
| REL | RELX | 19/2/26 | ? Holdings – Debt ? Growth | 2 | > |
| IHG | InterContinental Hotels | 26/2/26 | ? Holdings – Debt | 2 | |
| DATA | GlobalData | 2/3/26 | ? Acquisitions – Debt ? ROCE | 2 | > |
| GSK | GSK | 6/3/26 | ? Holdings – Debt ? Growth | 2 | |
| STEM | SThree | 9/3/26 | – Holdings – Growth | 2 | |
| MONY | Mony | 9/3/26 | – Holdings ? Growth | 2 | |
| CTEC | ConvaTec | 10/3/26 | ? holdings – Debt ? Growth ? ROCE | 2 | > |
| BNZL | Bunzl | 17/3/26 | ? Holdings – Debt – Growth | 2 | > |
| YU. | Yu | 18/3/26 | – CROCI ? ROCE | 2 | |
| HIK | Hikma Pharmaceuticals | 18/3/26 | ? Acquisitions – Debt | 2 | |
| JSG | Johnson Service | 19/3/26 | – Holdings – Debt | 2 | |
| ITRK | Intertek | 20/3/26 | ? Holdings – Debt ? Growth | 2 | |
| DOM | Domino’s Pizza | 24/3/26 | – Holdings – Debt ? Growth | 2 | |
| BA. | BAE Systems | 24/3/26 | ? Holdings ? Acquisitions – Debt ? Growth | 2 | > |
| LUCE | Luceco | 25/3/26 | ? Acquisitions – Debt ? Growth ? ROCE | 2 | |
| BBY | Balfour Beatty | 2/4/26 | – Holdings ? CROCI ? Growth – ROCE | 2 | |
| SPX | Spirax | 8/4/26 | – Holdings – Debt ? Growth | 2 | |
| IGG | IG Group | 8/4/26 | – Holdings – Growth | 2 | |
| APTD | Aptitude Software | 8/4/26 | – Holdings ? Acquisitions – Growth | 2 | |
| SVS | Savills | 9/4/26 | – Holdings – CROCI ? Growth ? ROCE | 2 | |
| MACF | Macfarlane | 10/4/26 | – Holdings – Debt ? Growth | 2 | > |
| PAGE | Michael Page | 13/4/26 | – Holdings? CROCI – Debt – Growth – ROCE | 2 | |
| CAML | Central Asia Metals | 15/4/26 | – Growth ? ROCE | 2 | |
| FEVR | Fevertree Drinks | 20/4/26 | – CROCI – Growth | 2 | |
| JDG | Judges Scientific | 22/4/26 | ? Acquisitions – Debt – Growth | 2 | > |
| WINK | M Winkworth | 24/4/26 | – Holdings – Growth | 2 | |
| EKF | EKF Diagnostics | 27/4/26 | ? CROCI – Growth ? ROCE | 2 | |
| IOF | Iofina | 1/5/26 | ? CROCI – ROCE ? Shares | 2 | |
| AEO | Aeorema Communications | 18/5/26 | – CROCI ? Growth ? ROCE | 2 | |
| ASY | Andrews Sykes | 18/5/26 | – Holdings – Growth | 2 | |
| CARD | Card Factory | 21/5/26 | – Holdings – Debt | 2 | |
| ANP | Anpario | 1/6/26 | ? CROCI – Growth ? ROCE | 2 | > |
| QQ. | QinetiQ | 10/6/26 | ? Holdings ? Acquisitions ? Growth – ROCE | 2 | |
| OXIG | Oxford Instruments | 23/6/26 | – Holdings – Growth | 2 | > |
| REC | Record | 23/6/26 | – Holdings – Growth | 2 | |
| POLR | Polar Capital | 3/7/26 | ? Holdings – Growth | 2 | |
| ULVR | Unilever | 28/7/26 | – Debt – Growth | 2 | |
| BKG | Berkeley | 11/8/26 | ? CROCI – Growth ? ROCE | 2 | |
| NTBR | Northern Bear | 12/8/26 | – CROCI ? Growth ? ROCE | 2 | |
| MSI | MS International | 17/8/26 | – CROCI ? Growth ? ROCE | 2 | |
| GDWN | Goodwin | 28/8/26 | – CROCI – Growth ? ROCE | 2 |
Richard Beddard
Contact Richard Beddard by email: richard@beddard.net, web: beddard.net
This article is for educational purposes only. It is not a recommendation to buy or sell shares or other investments. Do your own research before buying or selling any investment or seek professional financial advice.
And, there it is… Cerberus.