Operating Margin - Diploma PLC (LSE:DPLM)

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Price: 5 295 GBX -0.09%

Market Cap: 7.1B GBX

18.4%

Current

17%

Average

3.8%

Industry

Operating Margin represents how efficiently a company is able to generate profit through its core operations.

Higher ratios are generally better, illustrating the company is efficient in its operations and is good at turning sales into profits.

Operating Margin

18.4%

Operating Profit

281m

Revenue

1.5B

Operating Margin Across Competitors

Country		Company	Market Cap	Operating Margin
UK		Diploma PLC LSE:DPLM	7.1B GBP	18%
JP		Mitsubishi Corp TSE:8058	13.9T JPY	2%
JP		Itochu Corp TSE:8001	13.3T JPY	5%
JP		Mitsui & Co Ltd TSE:8031	12.9T JPY	3%
US		United Rentals Inc NYSE:URI	50.5B USD	25%
US	W	WW Grainger Inc XMUN:GWW	41.6B EUR	14%
US		W W Grainger Inc NYSE:GWW	48.6B USD	14%
US		Fastenal Co NASDAQ:FAST	48.1B USD	20%
JP		Marubeni Corp TSE:8002	7.1T JPY	5%
US		Ferguson Enterprises Inc NYSE:FERG	44.1B USD	9%
JP		Sumitomo Corp TSE:8053	6.4T JPY	5%

Diploma PLC
Glance View

Economic Moat

None

Market Cap

7.1B GBX

Industry

Trading Companies & Distributors

Diploma PLC, a British company with a rich history, is known for its unique approach to adding value in otherwise niche markets since its inception in 1931. The company thrives on its strategy of acquiring and nurturing small-to-medium enterprises and integrating them into its core business areas—Life Sciences, Seals, and Controls. Each of these sectors functions with a tailored approach, yet all are intricately tied under the umbrella of specialisation and high-performance capabilities. In the Life Sciences business, Diploma supplies essential consumables and services to the healthcare and environmental industries, focusing on sectors where precision and dependability are paramount. Through its Seals business, it offers vital components and solutions to industries ranging from heavy mobile machinery to aerospace, while the Controls segment provides a broad array of wiring, cable, and related products. What sets Diploma PLC apart is its diversified revenue model coupled with a decentralized operating philosophy, allowing its businesses to maintain the agility of smaller entities while benefiting from the strength of a larger organization. Diploma’s well-practiced strategy of acquiring entrepreneurial companies, often family-owned, allows them to expand while retaining their unique DNA. The company then enhances these businesses by infusing operational efficiencies, leveraging its global reach, and encouraging best practice sharing across its decentralized network. This model not only stimulates organic growth but also ensures steady cash flow, resilience to market fluctuations, and sustainable profitability. In essence, Diploma PLC has carved out its niche by fostering growth through strategic acquisitions and operational excellence, ensuring its enduring success in specialised markets.

View DPLM Analysis

DPLM Intrinsic Value

What is Intrinsic Value?

Economic Moat is a concept popularized by Warren Buffett to describe a company's durable competitive advantage. It represents the 'moat' that protects a company from competitors and helps it sustain profitability over the long term. Our analysis of the past 10 years showed that companies with a wide economic moat significantly outperformed the market, delivering +645% returns compared to +189% for the S&P 500.

Our research into Economic Moat performance spans the past 10 years and focuses on companies with a wide economic moat. For this analysis, we calculated the average stock price returns of these companies, comparing them to the performance of the S&P 500 index over the same period.

The results were compelling: wide moat stocks achieved a remarkable +645% average return, compared to +188% for the broader market. This difference highlights the long-term benefits of investing in businesses that can maintain their market position and pricing power over time.

Note: This research does not account for survivorship bias. Past performance is not indicative of future results.

Determining whether a company has an economic moat requires both a deep dive into financial metrics and a qualitative assessment of its competitive position. Our analysts conduct a rigorous evaluation that focuses on identifying structural advantages that enable a company to sustain profitability and defend its market share over the long term.

The process begins with an analysis of a company’s historical financial performance. We assess how consistently the company has generated returns above its cost of capital and whether those returns have been stable or improving. However, financial performance alone doesn’t reveal the full picture. To understand the sources of these advantages, we evaluate five key drivers of economic moats:

Network Effect: We analyze whether the value of a company’s product or service grows as its user base expands. Platforms like payment systems or marketplaces benefit from this self-reinforcing.

Switching Costs: We assess whether customers face significant costs or disruptions when switching to a competitor’s product or service. High switching costs create customer stickiness and provide pricing power.

Intangible Assets: Strong brands, patents, and regulatory licenses can protect a company’s market position by creating barriers for competitors or enabling premium pricing. For example, a well-recognized consumer brand may command higher customer loyalty and margins.

Efficient scale: Occurs when a market is optimally served by one or a few players, making it unprofitable for new entrants to compete. This typically happens in industries with high fixed costs or geographic constraints, such as utilities or pipelines.

Cost Advantage: Companies with structural cost advantages can produce goods or services at a lower cost than their competitors, enabling them to offer competitive pricing or maintain higher margins. These advantages often arise from economies of scale, superior supply chain management, or proprietary technology. Firms like Walmart leverage their massive scale to negotiate better terms with suppliers, allowing them to undercut competitors on price.

By examining these factors in combination with a company’s financial performance and market positioning, we classify each company into one of three categories:

This rigorous evaluation ensures that our moat ratings are both comprehensive and reliable, giving investors the tools they need to make well-informed, long-term decisions.

The AI Assistant may sometimes provide inaccurate information.

Make your own investment decisions or consult a licensed financial advisor.

US	Johnson & Johnson NYSE:JNJ	Pharmaceuticals
US	Berkshire Hathaway Inc NYSE:BRK.A	Financial Services
US	Bank of America Corp NYSE:BAC	Banking
US	Mastercard Inc NYSE:MA	Technology
US	UnitedHealth Group Inc NYSE:UNH	Health Care
US	Exxon Mobil Corp NYSE:XOM	Energy
US	Pfizer Inc NYSE:PFE	Pharmaceuticals
US	Palantir Technologies Inc NYSE:PLTR	Technology
US	Nike Inc NYSE:NKE	Textiles, Apparel & Luxury Goods
US	Visa Inc NYSE:V	Technology
CN	Alibaba Group Holding Ltd NYSE:BABA	Retail
US	JPMorgan Chase & Co NYSE:JPM	Banking
US	Coca-Cola Co NYSE:KO	Beverages
US	Walmart Inc NYSE:WMT	Retail
US	Verizon Communications Inc NYSE:VZ	Telecommunication
US	Chevron Corp NYSE:CVX	Energy

	Johnson & Johnson NYSE:JNJ	US
	Berkshire Hathaway Inc NYSE:BRK.A	US
	Bank of America Corp NYSE:BAC	US
	Mastercard Inc NYSE:MA	US
	UnitedHealth Group Inc NYSE:UNH	US
	Exxon Mobil Corp NYSE:XOM	US
	Pfizer Inc NYSE:PFE	US
	Palantir Technologies Inc NYSE:PLTR	US
	Nike Inc NYSE:NKE	US
	Visa Inc NYSE:V	US
	Alibaba Group Holding Ltd NYSE:BABA	CN
	JPMorgan Chase & Co NYSE:JPM	US
	Coca-Cola Co NYSE:KO	US
	Walmart Inc NYSE:WMT	US
	Verizon Communications Inc NYSE:VZ	US
	Chevron Corp NYSE:CVX	US

	Johnson & Johnson NYSE:JNJ	210.33 USD 0.49%
	Berkshire Hathaway Inc NYSE:BRK.A	756 120.01 USD 0.93%
	Bank of America Corp NYSE:BAC	54.55 USD -0.47%
	Mastercard Inc NYSE:MA	565.47 USD -0.1%
	UnitedHealth Group Inc NYSE:UNH	331.63 USD -0.77%
	Exxon Mobil Corp NYSE:XOM	117.41 USD 2.38%

	Franklin Covey Co NYSE:FC	16.73 USD 2.58%
	Mohawk Industries Inc NYSE:MHK	109.2 USD -1%
	Ardmore Shipping Corp NYSE:ASC	11.14 USD -0.18%
	ASGN Inc NYSE:ASGN	48.73 USD 2.05%
	Skyworks Solutions Inc NASDAQ:SWKS	65 USD -1.54%
	Weatherford International PLC NASDAQ:WFRD	77.405 USD 1.54%

	Johnson & Johnson NYSE:JNJ	210.33 USD 0.49%
	Bank of America Corp NYSE:BAC	54.55 USD -0.47%
	Mastercard Inc NYSE:MA	565.47 USD -0.1%
	Salesforce Inc NYSE:CRM	258.14 USD 1.27%
	Abbvie Inc NYSE:ABBV	224.31 USD 0.29%
	Home Depot Inc NYSE:HD	356.75 USD 1.15%

Diploma PLC
LSE:DPLM