FTSE 100 shares round-up: Diploma and ICG

The positioning of quality compounder Diploma (LSE:DPLM) in “good times and bad” today failed to prevent the high-flying stock from feeling results-day heat during a sharp FTSE 100 sell-off.

The group, which has a market value of £7 billion having joined the blue-chip index in 2023, reported “another great year” as annual organic revenues growth topped expectations at 11% and it improved the operating margin by 160 basis points to 22.5%.

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The performance extends the strong run since chief executive Johnny Thomson took the helm in 2019, when Diploma was UK-centric, narrower and much more exposed to industrial cycles.

Its portfolio of businesses across seals, controls and life sciences create the solutions that make customers’ lives easier, with the value created from this far in excess of the cost of the product. 

Diploma now regards its growth as much more structural, having broadened into attractive markets such as aerospace, clean energy, diagnostics and data centres.

It has acquired 48 businesses since 2019, investing £1.4 billion in order to drive future organic growth opportunities and strong returns. Six of the deals have come since the final quarter of 2024-25 as Thomson said Diploma had “great momentum” at the start of the new year.

The shares peaked at a record price of 5,650p last month, representing a 55% rise from April’s post-tariffs low and more than double their level of two years ago.

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However, they fell 85p to 5,175p in today’s session as sentiment weakened across the FTSE 100 index. The decline came even though Diploma forecast 6% organic revenues growth and unchanged margin, guidance that prompted Deutsche Bank to lift its earnings per share estimate for this year by 8% and its price target from 5,400p to 6,000p.

Morgan Stanley said the results strengthened its Overweight position and 5,850p price target. 

The bank added: “We see Diploma as a high-quality, value-add distributor, supported by structural growth drivers and with significant scope for ongoing organic, margin and free cash flow growth.”

Flagship businesses within Diploma’s decentralised model include Chicago’s Windy City Wire, which makes premium low voltage wire and cable. It delivered double-digit growth in today’s results as the group’s adjusted earnings per share rose 21% to 176p.

Extending a 25-year record of dividend growth, Diploma announced a 5% higher total for the year of 62.3p a share. This includes plans to pay 44.1p a share on 30 January.

Thomson has previously described the company’s decentralised culture that preserves local ownership but with an alignment to group objectives as “our secret sauce”.

He said today: “These strong results demonstrate how we balance ambitious earnings growth and disciplined returns – in good times and bad – to build on our long track record of sustainable quality compounding.”

Only a handful of stocks found positive territory during a risk-off session in the FTSE 100, with the best being global alternative asset manager ICG (LSE:ICG).

ICG surged 99p to 1,988p after it announced a long-term strategic partnership to accelerate the development and distribution of private markets products targeted at wealthy investors. European asset manager Amundi has taken a 9.9% in ICG as part of their tie-up.

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Half-year results were also considerably ahead of market forecasts, with fee-earning assets under management of $83.8 billion (£64 billion) up 12%. Pre-tax profits rose 77% to £351.6 million, well ahead of the £250 million forecast.

ICG boasts a 15-year record of dividend growth, which over the last five years has been at an annualised rate of 10%.  The interim dividend for payment on 9 January is up 5% to 27.7p. 

Panmure Liberum said: “While there are some well-founded concerns emerging about the private credit sector more broadly, ICG’s experience, investment track record, strict investment process and new strategic partnership mean it is relatively well placed, we believe.”

The broker, which notes that the prospective yield on a twice covered dividend is almost 5%, has a price target of 2,450p.

UBS added: “Not only is this a significant pre-tax profit beat today, the announcement of a new wealth partnership with Amundi catapults ICG into the private markets/wealth investor arena, where previously its offering was limited.”