Halma’s Revenue Surge Outpaces Earnings Growth: A Closer Look at the Numbers

Halma PLC (LON:HLMA) has long been a poster child for steady growth in the industrial and technology sectors. Over the past three years, the company’s revenue has surged at a 11.7% CAGR, handily outpacing the 10.2% CAGR in earnings per share (EPS). While this might sound like a minor gap, the divergence underscores a critical question: Why is revenue growth outpacing earnings, and what does it mean for investors?

Let’s unpack the numbers.

The Revenue Machine: Acquisitions and Organic Momentum

Halma’s revenue growth has been turbocharged by a dual strategy: strategic acquisitions and organic expansion. Since 2022, the company has spent over £158 million on deals like Lamidey Noury Medical and TeDan Surgical Innovations, which have expanded its footprint in high-margin niches like medical devices and environmental safety.

The numbers tell the story:
- 2022 Revenue: £1.76 billion
- 2023 Revenue: £1.98 billion (+12.7% YoY)
- 2024 Revenue: £2.16 billion (+8.9% YoY)
- 2025 Projections: £2.43 billion (CAGR ~11.7%)

Acquisitions contributed meaningfully, but organic growth has also been robust. In the first half of 2025, organic constant currency (OCCY) revenue rose 11.5%, with acquisitions adding another 4.3%. This mix suggests Halma isn’t just buying its way to growth—it’s also executing well in core markets.

Earnings Growth: A Strong, But Slower, Follow-Up

While revenue has raced ahead, earnings have grown steadily, albeit at a slightly slower pace. The EPS CAGR of 10.2% since 2022 reflects both top-line expansion and margin dynamics.

Here’s the breakdown:
- 2022 EPS: ~£0.63 (inferred)
- 2023 EPS: £0.757 (+20% YoY)
- 2024 EPS: £0.4301 (adjusted, +17% YoY)
- 2025 Projections: £0.85+ (CAGR ~10.2%)

Why the lag? Two factors stand out. First, Halma has been reinvesting heavily in R&D, with spending hitting 5% of revenue in 2025’s first half (£54.1 million). This is a deliberate move to fuel future growth, but it eats into near-term profits. Second, while margins have improved—net margins rose to 13.3% in 2024 from 12.3% in 2023—the cost of integrating acquisitions (like one-time expenses) has temporarily dented profitability.

The Big Picture: Outperforming a Slumping Industry

The gap between revenue and earnings growth might raise eyebrows, but context matters. Halma’s performance is decoupled from its peers. While the broader Electronic industry saw EPS decline -2.3% over the same period, Halma’s earnings growth—despite trailing revenue—remains positive and accelerating.

Consider this:
- Halma’s trailing 12-month EPS growth hit 20.4% in 2024, far outpacing the sector.
- Free cash flow conversion hit 108% in 1H 2025, enabling debt reduction (net debt/EBITDA fell to 1.27x) and a 7% dividend hike.

Conclusion: A Growth Story with Room to Run

Halma’s ability to grow revenue at an 11.7% CAGR while delivering 10.2% EPS growth isn’t a sign of weakness—it’s a testament to disciplined execution. The company is investing in its future (R&D, acquisitions), which may temporarily suppress margins but positions it to dominate niche markets.

Crunching the numbers:
- Revenue to double: From £1.76 billion in 2022 to £2.43 billion in 2025 (and counting).
- Margin resilience: Net margins improved despite reinvestment, suggesting efficiency gains.
- Balance sheet strength: Strong cash flow and low debt give Halma flexibility to capitalize on opportunities.

The 10%+ EPS growth may lag revenue, but in an industry where peers are shrinking earnings, Halma’s trajectory is a standout. For investors, this is a stock built to weather volatility—a slow-and-steady winner in a fast-and-tumble world.

Final Takeaway: Halma’s growth isn’t just about size—it’s about quality. Even with revenue outpacing earnings, the fundamentals are solid. This isn’t a sprint; it’s a marathon, and Halma is still pacing ahead.