Shares for the future: fresh news forces update on five stocks
There’s a lot going on in analyst Richard Beddard’s Decision Engine including debt and bereavement risk, personnel merry-go-rounds and a company in an earnings trough.
13th February 2026 15:00
by Richard Beddard from interactive investor
Recent news from five Decision Engine members has not been significant enough to force a rescore. It has though subtly changed my disposition to these companies for better or worse, by making me more alert to risks or the signs that a strategy is paying off.
These thoughts may come to bear with other developments on the scores I give next time the companies publish annual reports, so I have updated the wording of my summaries.
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Volution: debt watch
When I scored Volution Group (LSE:FAN)in November, I noted and penalised the company’s high level of debt relative to operating capital. Debt was 43% of capital for the year to July 2025, a record high for the company.
However, debt can be measured in more than one dimension. The actual amount of debt was only twice a recent year’s cash flow. Debt was high, partly because the maker of ventilation systems requires surprisingly little capital to operate. If its cash flows are sustainable, the debt is affordable.
Volution’s debt had burgeoned because it had acquired FanTech for £144 million. It was the company’s largest acquisition. FanTech is an Australian manufacturer of commercial and residential ventilation systems.
In December, Volution announced an agreement to acquire AC Industries (ACI). Another Australian company, ACI is the market leader in ducting for mine ventilation. The price tag was lower, but still substantial.
The deal was concluded in February and establishes Australasia as a region to rival Europe and the UK in terms of its contribution to Volution’s revenue.
At £75 million, the price was not much less than a single recent year’s free cash flow so I don’t think we can expect the company’s debt to capital ratio to fall much in the year to July 2026, if at all.
Having already recognised a modest debt risk, I’m not inclined to penalise Volution again, even though it is an outlier. Let’s just say it is on debt watch.
Volution | FAN | Manufacturer of ventilation products | 10/02/2026 | 6.8/10 |
How capably has Volution made money? | 3.0 | |||
Under chief executive Ronnie George, Volution has grown revenue and profit at 12% compound annual growth rate (CAGR) since it floated in 2014. Most of this growth has been acquisitive. Volution’s subsidiary brands are highly profitable and cash generative, which is probably a result of its scale. | ||||
How big are the risks? | 2.5 | |||
The acquisitions of Fantech in November 2024 and ACI in December 2025 raised debt to substantially more than operating capital, although prodigious cash flow makes it look affordable. A Chinese supply chain and cyclical markets could dent profitability, but so far Volution has prospered. | ||||
How fair and coherent is its strategy? | 3.0 | |||
Volution is building scale to become more efficient, through acquisitions. A high Return on Tangible Invested Capital (ROTIC) indicates it is efficient and has not overpaid for acquisitions. The company’s products improve air quality, and consequently our health. Employees appear engaged. | ||||
How low (high) is the share price compared to normalised profit? | -1.7 | |||
High. A share price of 685p values the enterprise at £1,534 million, about 28 times normalised profit. | ||||
NB: Bold text indicates factors that reduce the score. Bold and italicised text doubly so. The maximum score is 3 for each criterion except price, which has a maximum of 1 (explainedhere) | ||||
Churchill China: bottom fishing
In a trading update earlier this month, Churchill China (LSE:CHH) confirmed that turnover was £76 million for the full year to December 2025, not far off its all-time high in 2022.
Profit was about £6 million, the number anticipated by Churchill China in July when the company shocked me by reporting a deterioration of trading in Europe, hitherto its fastest-growing geographical market.
Back then, Michael Cunningham, Churchill China’s chief financial officer, told me that he didn’t want to come back to shareholders with another warning, so a little kudos goes to the company for being the exception that proves the rule that profit warnings come in threes.
The year to December 2025’s profit will be 30% below 2024’s, though. In fact, it takes profit back to the level Churchill China achieved in 2017. After tax, return on capital could drop to 8% or perhaps a shade lower.
I look for companies that are capable of sustaining an after-tax Return on Capital of 8% or more. Based on this quality measure, Churchill China’s status in the Decision Engine is borderline.
Churchill China manufactures tableware for the hospitality industry. The pandemic and post-pandemic years have been very difficult for its customers due to opening restrictions, initially, and severe cost inflation subsequently. Churchill China’s facing higher energy and labour costs too.
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In the UK, where the company earns 42% of its revenue, restaurants are feeling the pinch and the materials business, a small part of the company that supplies clay, has lost a customer. In the UK, Churchill China is the market leader, so it is Europe we are primarily looking to for growth. The good news is trading there stabilised in the second half of the year. Declines in the first half had been the main reason for the profit warning.
Churchill China says changes it has made to sales and marketing in Europe have had an effect. Essentially, I think it is selling cheaper plates. Round plates, rather than pressure-cast square ones, for example.
These products attract high profit margins, but the company must sell more of them to achieve the same level of profit. From January, the VAT rate on food consumed in restaurants has reduced in Germany, perhaps this will stimulate some demand.
I think Churchill China is doing what it can to grow and improve profitability. But it is stuck between a rock, higher costs, and a hard place, moribund European economies. If it is to reward investors handsomely, one or both things must change.
Meanwhile, I don’t think it is a bad business in what is probably an earnings trough.
Churchill China | CHH | Manufactures tableware for restaurants, etc. | 10/02/2026 | 7.5/10 |
How capably has Churchill China made money? | 1.5 | |||
A proprietary manufacturing process enables Churchill to make durable attractive tableware cheaply, resulting in profitable long-term growth. Since 2020, the hospitality industry has been disrupted. Revenue has been volatile and profitability, sub-par. Return on capital will probably drop to or marginally below 8% in 2025. | ||||
How big are the risks? | 2.0 | |||
Churchill China has no debt, experienced management and a vertically integrated supply chain. It is market leader in the UK, so sales and profits are closely tied to the economy. Until 2020, Churchill was growing rapidly in Europe, but growth has stalled there too. | ||||
How fair and coherent is its strategy? | 3.0 | |||
The big opportunity is Europe, because it is a much bigger market than the UK. The company focuses on long-term growth drivers: durable plates, high availability of stock, empowering employees, investing in technology to reduce costs and emissions and increase productivity and product quality. | ||||
How low (high) is the share price compared to normalised profit? | 1.0 | |||
Low. A share price of 430p values the enterprise at £40 million, about 5 times normalised profit. | ||||
NB: Bold text indicates factors that reduce the score. Bold and italicised text doubly so. The maximum score is 3 for each criterion except price, which has a maximum of 1 (explainedhere) | ||||
Solid State: bereavement risk
When I scored Solid State (LSE:SOLI) in August, one risk factor I considered insignificant was a change in management. Having joined Solid State in 1986, chief executive Gary Marsh spent his entire career there. He had led the company since he was appointed managing director in 1997 (he became chief executive in 2010). He was 59 when he sadly died last November.
Around the turn of the century, Solid State Supplies, the company’s principal business then, was struggling like other electronic components suppliers because manufacturing was moving offshore to China and the Far East. Solid State survived by doubling down, buying Steatite, a UK contract manufacturer of rugged computers in 2002. It grew its two divisions by focusing on highly regulated niches, such as defence and medical equipment, and acquiring similar businesses.
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Since Gary Marsh guided this strategy, his death could have resulted in disruption. It might still. I didn’t react straight away because I’ve met Gary Marsh a few times, and my first reaction was not to think of the consequences for the business, it was more human.
But also I didn’t feel I needed to react. Outwardly, at least, Solid State’s board has always seemed settled and collegiate. John Macmichael, the new interim chief executive, is the managing director of Solsta (the newish name for the enlarged Solid State Supplies, the component distribution division). He already sat on the board, along with Matthew Richards, managing director at Steatite and battery manufacturer Custom Power, and Peter James, chief financial officer.
John Macmichael has been with Solid State 20 years, and the other two executives for the best part of a decade. I didn’t see any reason to panic and downgrade the share while we await news of a permanent appointment. I still don’t.
Solid State | SOLI | Manufactures electronic systems and distributes components | 10/02/2026 | 7.9/10 |
How capably has Solid State made money? | 2.0 | |||
Under Gary Marsh, Solid State’s experienced CEO, the company grew revenue and profit through acquisition and investment at high single-digit CAGRs net of the growth in the share count, despite a collapse in revenue and profit in 2025. Return on Capital is strong, and cash flow decent. | ||||
How big are the risks? | 2.0 | |||
Mr Marsh died in 2025, but the three other executives have shared much of the journey with him. Lumpy defence contracts and cyclical markets can affect Solid State’s performance dramatically. The company is acquisitive, and did not earn an adequate ROTIC in 2025, however profitability was probably atypical. | ||||
How fair and coherent is its strategy? | 3.0 | |||
Solid State wants to grow its medical business, which shares many of the characteristics of defence with less volatility. It is developing and acquiring its own component brands and assembling more complex systems to increase margins and broaden its range. Solid State’s employee retention was 89% in 2025. | ||||
How low (high) is the share price compared to normalised profit? | 0.9 | |||
Low. A share price of 160p values the enterprise at £106 million, about 12 times normalised profit. | ||||
NB: Bold text indicates factors that reduce the score. Bold and italicised text doubly so. The maximum score is 3 for each criterion except price, which has a maximum of 1 (explainedhere) | ||||
Tristel and YouGov: personnel merry-go-rounds
Tristel (LSE:TSTL) and YouGov (LSE:YOU) are experiencing voluntary executive exits. Personal decisions are always difficult to interpret because they may or may not incorporate the manager’s perception of the trajectory of the business.
Matt Sassone, Tristel’s chief executive is leaving even though he’s only recently completed his first year in the job.
Tristel is not used to new chief executives, the last one was its founder, Paul Swinney who retired in September 2024. Liz Dixon, the company’s chief financial officer, followed him out last June.
There was no sign of trouble when I scored Tristel in December in the half-year trading update in January, but I get nervous when executives leave at major strategic moments. Tristel makes a novel hospital disinfectant that has no direct competitor, and following the approval of some of its products, it may be poised to crack the biggest healthcare market: the US.
Perhaps Matt Sassone received an offer he couldn’t refuse. That was the way his resignation was framed.
Tristel | TSTL | Manufactures hospital disinfectant | 10/02/2026 | 5.8/10 |
How capably has Tristel made money? | 3.0 | |||
Tristel has achieved double-digit profit growth for over a decade by developing unique disinfectants and introducing them into new geographical markets. It is highly profitable and cash generative. The company’s founder retired in September 2024. The CFO retired in June. The new CEO has also received a better offer. | ||||
How big are the risks? | 2.5 | |||
Unique, prosperous, and financially strong, there are few obvious risks, apart from the fact it needs a settled board. Trio, Tristel’s primary product uses pre-wetted wipes strengthened with plastic. To meet environmental targets, customers and Tristel would almost certainly prefer it to be plastic free. | ||||
How fair and coherent is its strategy? | 2.5 | |||
Although the company has mooted acquisitions, it is focused on exploiting its unique IP by doing what it has done in the past: protecting and improving its IP and rolling it out worldwide. Tristel makes hospitals safer and rewards employees but I remain sceptical of the executive pay level and targets. | ||||
How low (high) is the share price compared to normalised profit? | -2.2 | |||
High. A share price of 427p values the enterprise at £203 million, about 34 times normalised profit. | ||||
NB: Bold text indicates factors that reduce the score. Bold and italicised text doubly so. The maximum score is 3 for each criterion except price, which has a maximum of 1 (explainedhere) | ||||
Market researcher YouGov is attempting a pivot from human-first to AI-first translation, localisation, and content management. Its boardroom is also a bit of a merry-go-round.
A year after Stephan Shakespeare, the company’s co-founder, stepped back into an executive role as interim chief executive, the company’s chief financial officer is leaving after eight years in the role.
YouGov | YOU | Surveys public opinion and conducts market research online | 12/02/2026 | 7/10 |
How capably has YouGov made money? | 2.5 | |||
Under the leadership of Stephan Shakespeare, YouGov has grown adjusted profit at 29% CAGR over the last eight years, despite a considerable contraction over the last two that was offset by a large acquisition. Acquisition and restructuring means 2024 and 2025 profits are heavily adjusted. | ||||
How big are the risks? | 1.0 | |||
YouGov’s success comes from its large proprietary online panel, but rivals have developed their own. Rivals are also experimenting with cheaper AI-generated synthetic panels of dubious quality. The acquisition of CPS in 2024 saddled YouGov with considerable debt and management is in flux. | ||||
How fair and coherent is its strategy? | 2.5 | |||
YouGov has streamlined products and operations. It continues to prioritise investment in its panel and high-margin subscription products. So far, this has delivered lower returns. It is committed to human data, but using AI to help customers interrogate and analyse it. | ||||
How low (high) is the share price compared to normalised profit? | 1.0 | |||
Low. A share price of 208p values the enterprise at £420 million, about 11 times normalised profit. | ||||
NB: Bold text indicates factors that reduce the score. Bold and italicised text doubly so. The maximum score is 3 for each criterion except price, which has a maximum of 1 (explainedhere) | ||||
30 Shares for the future
Here’s the ranked list of Decision Engine shares. I review the scores at least once a year, soon after each company has published its annual report. The price scores are calculated using the share price prior to publication.
Generally, I consider shares that score more than 5 out of 10 to be worthy of long-term investment in sizes determined by the ideal holding size (ihs%).
company | description | score | qual | price | ih% | |
1 | FW Thorpe | Makes lighting systems for commercial, industrial and public settings | 9.0 | 0.8 | 9.6% | |
2 | Hollywood Bowl | Operates tenpin bowling centres | 8.0 | 0.5 | 7.0% | |
3 | James Latham | Distributes imported panel products, timber, and laminates | 7.5 | 1.0 | 7.0% | |
4 | Howden Joinery | Supplies kitchens to small builders | 8.0 | 0.4 | 6.8% | |
5 | Softcat | Sells software and hardware to businesses and public sector | 7.5 | 0.9 | 6.8% | |
6 | Bunzl | Distributes essential everyday items consumed by organisations | 7.5 | 0.6 | 6.2% | |
7 | Jet2 | Flies people to holiday locations, often on package tours | 7.0 | 1.0 | 6.0% | |
8 | Solid State | Manufactures electronic systems and distributes components | 7.9 | 7.0 | 0.9 | 5.9% |
9 | Renew | Maintains and improves road, rail, water, and energy infrastructure | 7.5 | 0.4 | 5.9% | |
10 | Auto Trader | Online marketplace for motor vehicles | 7.0 | 0.9 | 5.7% | |
11 | Bloomsbury Publishing | Publishes books and educational resources | 7.5 | 0.3 | 5.6% | |
12 | Churchill China | Manufactures tableware for restaurants etc. | 7.5 | 6.5 | 1.0 | 5.0% |
13 | Oxford Instruments | Makes imaging and semiconductor manufacturing systems | 6.5 | 0.8 | 4.7% | |
14 | Judges Scientific | Manufactures scientific instruments | 7.0 | 0.3 | 4.6% | |
15 | Cake Box | Cake shop franchise and sweet manufacturer | 7.0 | 0.1 | 4.2% | |
16 | Advanced Medical Solutions | Manufactures surgical adhesives, sutures and dressings | 6.5 | 0.6 | 4.1% | |
17 | Porvair | Manufactures filters and laboratory equipment | 8.0 | -1.0 | 4.1% | |
18 | Focusrite | Designs recording equipment, synthesisers and sound systems | 6.0 | 1.0 | 4.0% | |
19 | Macfarlane | Distributes and manufactures protective packaging | 6.0 | 1.0 | 4.0% | |
20 | YouGov | Surveys public opinion and conducts market research online | 7.0 | 6.0 | 1.0 | 3.9% |
21 | Cohort | Manufactures/supplies defence tech, training, consultancy | 8.0 | -1.1 | 3.8% | |
22 | Games Workshop | Designs, makes and distributes Warhammer. Licenses IP | 8.5 | -1.6 | 3.7% | |
23 | Keystone Law | Operates a network of self-employed lawyers | 7.5 | -0.7 | 3.7% | |
24 | Volution | Manufacturer of ventilation products | 6.8 | 8.5 | -1.7 | 3.5% |
25 | Anpario | Manufactures natural animal feed additives | 7.0 | -0.8 | 2.5% | |
26 | Goodwin | Casts and machines steel and processes minerals for niche markets | 8.5 | -2.3 | 2.5% | |
27 | Tristel | Manufactures hospital disinfectant | 5.8 | 8.0 | -2.2 | 2.5% |
28 | Quartix | Supplies vehicle tracking systems to small fleets | 7.5 | -1.8 | 2.5% | |
29 | 4Imprint | Customises and distributes promotional goods | 8.0 | -2.4 | 2.5% | |
30 | Renishaw | Makes tools and systems for manufacturers | 6.5 | -1.1 | 2.5% |
Click on a share's score to see a breakdown (scores may have changed due to movements in share price). Key: qual is the share’s score out of 9 for the three quality factors (capabilities, risks, and strategy), price is the price score from -3 to +1, and ih% is the suggested ideal holding size as a percentage of the total value of a diversified portfolio.
Richard Beddard is a freelance contributor and not a direct employee of interactive investor.
Richard owns Churchill China, Tristel, Volution and many shares in the Decision Engine. He weights his portfolio so it owns bigger holdings in the higher-scoring shares.
For more on the Decision Engine and Share Sleuth, please see Richard’s explainer.
Contact Richard Beddard by email: richard@beddard.net or on Twitter: @RichardBeddard
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