Everything turns on whether $88.9M is a cyclical floor or the new ceiling

• The collapse. Revenue fell three straight years from a $133.6M COVID-warehouse peak (FY2022) to $88.9M in FY2025 — back to 2015 dollars — and net income dropped 71% to $10.2M. The optical 16x P/E sits on trough earnings.
• The bull read. FY2022 was a spike to mean-revert away from; with ~47% incremental margins, a modest volume recovery roughly triples earnings power and re-rates the stock from ~3x mid-cycle EV/EBITDA.
• The bear read. FY2022 was a one-off ceiling on a few-hundred-$M niche; management itself guides FY2026 down to ~$86M and refuses to call a recovery — so 16x may be the right multiple on the right earnings.

A high-quality cash machine, priced on its worst year in a decade

Somero assembles rather than forges, so capex runs under 1% of sales and almost all profit converts to cash — free cash flow actually rose at the trough as working capital unwound. Debt-free with net cash worth a quarter of market value, it funds the dividend and buybacks through any downturn. Peers earn 4–13% ROIC at 19–28% gross margins; Somero earns 17% in its worst year.

Pricing power proven in the margin — but it stops at the US border

• It held. Gross margin slipped only 57%→52% while volume halved — pricing that survives a demand shock that severe is structural, not cyclical luck. An estimated ~80% global share of the laser-screed niche backs it.
• It's enforced. A 63-patent estate, litigated and won: a US court granted a permanent injunction against copyist Masterscreed in 148 days. The real switching cost is the trained-crew competence stack around the machine, not the $50k–$550k box itself.
• It doesn't travel. Against the same low-cost rivals the US core shrugs off, Europe revenue fell 39% in FY2025 — the live proof the moat is narrow: deep where North America is 77% of sales, thin wherever the service ecosystem is.

Owners revolted, and the cash fortress is being repointed at M&A

• A clean sweep of no votes. At the June 17, 2026 AGM all seven resolutions drew under 50% support — the remuneration policy just 38.7% — yet two long-tenured directors kept their seats on Delaware plurality rules. A year earlier the same pay vote passed with 98%.
• Alignment reset. New CEO Tim Averkamp (ex-Deere, ex-Astec) held zero ordinary shares at end-FY2025 as his 2026 base rose 64% to $630k; the FY2025 dividend was cut ~40%, removing the income bid on a single-analyst micro-cap.
• Fortress repurposed. A new framework permits leverage to 2.0x net-debt/EBITDA and suspended special dividends to fund acquisitions — rational against a growth ceiling, but it converts a balance-sheet floor into capital-allocation risk. A board update is due mid-July 2026.

A multi-year de-rating on a stock too thin to size

• Confirmed downtrend. The shares sit below a falling 200-day in a death-cross regime since August 2024; a current bounce off the 173p low runs straight into resistance around 212p.
• Specialist-only liquidity. At roughly £175k traded a day (~0.16% of market cap), a 5% position is viable only for funds under ~£3.6M; the tape and the fundamentals tell the same lower-demand story rather than contradicting it.
• No short to fade. No disclosable net short sits on the UK register and the forensic read is clean (22/100 risk, zero red flags); the only positioning on record is a concentrated activist long register pressing for change.