RWS Holdings: translating profit into increasing dividends

Summary

RWS Holdings (LON:RWS) is a mid-cap, AIM-listed provider of technical translation and search services.With a StockRank of just 47, this won't appeal to quant investors. The Momentum Rank is 7, reflecting a weak share price and broker downgrades over the last year.However, if current broker forecasts are to be belieived, the forward P/E is now 7 with a 8% yield, which will appeal to value and income investors, particularly as the company has a 20-year unbroken record of increasing its dividend payment.On the surface, the company's quality metrics are uninspiring. However, this is partly due to how past acquisitions were accounted for. Going forward, these metrics will likely improve to reflect that this is a relatively capital-light business.The large acquisitions the company made in 2017 and 2020 have generated scale but at the cost of margins, and this may well be a case of diworsification. However, these deals were done with equity, which was highly rated at the time, so the impact on investors in the business today is minimal.Two market fears appear to be holding the share price back. The first is the implementation of the Unitary Patent in the EU, which reduces the need for...