Summary and outlook Renishaw’s prelim results highlight, understandably, a difficult year to June. Revenues are in-line while PBT is slightly shy of guidance given less than 1 month ago. It appears that consensus went slightly higher than guidance with an EPS expectation of 57.1p compared to the result of 51.0p and INVe of 49.4p. Management has taken the appropriate actions to reduce costs in light of Covid-19 and no final dividend has been declared – which may disappoint some given the large net cash position. The outlook statement is brief, given its limited visibility, but highlights good growth opportunities and new products. We note the group’s high exposure to aerospace, but this may be offset by semi-con and an expected automotive recovery. Financials Full year revenues declined by 11% (-13% at constant currency) to £510.2m (guidance c.£510m, given on 17 July 2020). Adjusted PBT declined 53% to £48.6m (guidance c.£50m). EPS decreased by 57% to 51.0p (vs INVe 49.4p and consensus of 57.1p). The interim dividend was cancelled and no final has been declared. Net cash is £120.4m providing a strong balance sheet and compares to £106.8m last year. Investment case and valuation Renishaw’s status as a provider of capital equipment – albeit aligned with automation and enhanced precision – exposes it to volatile demand patterns in both traditional and new markets. Renishaw is exceptionally strong in its markets, its patent portfolio and financially, and cycles will turn positive at some stage. However, valuation, low visibility and Covid-19 disruption leave the shares looking vulnerable, in our view. We also note the strength of the share price going into these results. On our forecasts, the shares trade on a FY21E PE of 57.3x and EV/EBITDA of 31.7x which looks extremely expensive compared to both listed and competitive peers. Management is hosting a results webcast at 11am today.