Update: Judges Scientific

Judges Scientific issued their H1 F2025 trading update which carried a profit warning. I first initiated on Judges Scientific in March 2025  when shares were trading around £69/share. Shares appreciated to £90 but have since fallen to £63. The trading update does not change the thesis. Judges should pencil out to a mid- to high-teens IRR from today's price over the next 10 years with optionality for an even higher return.

Investment Thesis Summary

Taking a step back, the original thesis was as follows

• Proven Record. Over the last 10 years, Judges has deployed 100% of FCF into M&A averaging 24% ROIC on total capital. In addition, Judges has grown organically at 5% cagr at a 39% ROIC on tangible capital, demonstrating the inherent differentiation of the products Judges sells.
• Exceptional Capital Allocation. Judges’ CEO is disciplined, has a proven track record, has skin in the game (10% ownership), has built a strong team including two ex-Halma execs, and has created an entrepreneurial culture and decentralized structure that can scale.
• Cheap on reasonable M&A assumptions. Judges is small enough that it can redeploy 100% of capital at 18% returns for the foreseeable future. At £69/share You are paying 18x P/E and 20x FCF for a business that should compound FCF high-teens for the next 10 years. Intrinsic value assuming 5% organic growth, 65% of FCF reinvested in M&A at an 18% ROIC, and a 15x exit P/E multiple is £110/share. This increases significantly if Judges can sustain a 20x+ exit P/E multiple (Halma is currently 28x) or if Judges can redeploy 100% of capital, like it has over the last 10 years.
• Short-Term Headwinds don’t impact LT thesis drivers. Judges is facing headwinds including lower R&D spending in China and the US and lumpiness in one of its large subsidiaries, Geotek and potential impact from tariffs as 85%+ of Judges sales are overseas and the US accounts for 28%. These headwinds are temporary and do not impact the core thesis driver, which is M&A.

In the next section, I'll provide a brief update on H2 and walk through an updated valuation.