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Goodwin makes the kind of industrial kit nobody notices until everybody suddenly needs it. That has made the company a winner from defense and nuclear spending. Now it is deciding whether to cash in while the market is paying attention.

Goodwin shares jumped after the Stoke-on-Trent engineering group reported a record year and confirmed that a major disposal process is moving ahead.

For the year to April 30, revenue rose 27% to £280 million. Trading profit more than doubled to £77.5 million (about $105 million), up 118% from £35.5 million a year earlier.

The company proposed an ordinary dividend of 330p per share, up 18% from 280p.

The growth was driven mainly by Mechanical Engineering, where demand surged for precision-machined, high-integrity castings used in defense and nuclear applications. Goodwin said it has become a leading supplier on multiple UK and US Navy frigate and submarine programmes, helped by years of investment in engineering expertise, manufacturing capability and customer relationships.

That success has also made the division saleable. Goodwin has appointed Rothschild & Co to run a process for a substantial part of Mechanical Engineering, including Goodwin Steel Castings, Goodwin International, Noreva, Easat Group and its pumps businesses.

The sale process is already underway, with discussions taking place with several interested parties. The board is targeting completion within the next 12 months and expects a substantial part of any cash proceeds to be returned to shareholders.

The numbers show why investors care. The Mechanical Engineering businesses marked for sale generated £66.6 million of trading profit, while continuing operations generated £10.9 million.

Goodwin ended April with net debt of £29 million after paying a £40 million special interim dividend during the year.

Goodwin is having the kind of year small-cap industrial investors dream about: record profits, strong margins, rising dividends and a business sitting right in the path of defense spending. The awkward bit is that the best bit may soon belong to someone else.

Mechanical Engineering is not some sleepy side asset. It is the engine room. It supplies high-integrity castings, naval components, valves, pumps and radar systems into markets where customers care more about reliability than bargain-bin pricing.

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That is a powerful place to sit. Western governments are spending more on defense. Nuclear and naval programs are long-cycle, specialist and hard to supply. If Goodwin can make parts that few others can make consistently, that scarcity has real value.

Which is exactly why selling now makes sense, at least on paper.

Public markets often undervalue specialist family-controlled industrial groups, especially ones that do not spoon-feed investors quarterly narratives. Strategic buyers or private capital may be willing to pay a much higher price for scarce defense manufacturing capability than the stock market is willing to reflect in Goodwin's share price.

So the board's logic is not hard to follow. If someone offers a full price for the defense-heavy assets, shareholders could get a large cash return, the balance sheet could move toward zero net debt, and the remaining group could focus on Refractory and Technological businesses. But this is not just a tidy portfolio reshuffle. It is a possible identity change.

After the sale, Goodwin would be smaller and less obviously tied to the defense boom. The remaining businesses include profitable Refractory operations serving jewelry casting, tire molds, aerospace and industrial markets, plus growth opportunities such as AVD Fire, which makes lithium battery fire-extinguishing products, and Duvelco, the advanced plastics business.

Those are interesting. Some could be very valuable over time. But they are not yet the same as a proven defense and nuclear cash machine.

That makes valuation the whole story. A rich sale price could crystallize value and prove the market had been too conservative. A weak price would mean Goodwin had sold its crown jewels just as the crown started glowing.

Investors will watch the disposal process closely, especially whether multiple bidders emerge and how much of the proceeds Goodwin returns to shareholders.

They will also need clarity on what the post-sale company looks like. Refractory is profitable and growing, but Duvelco and AVD Fire will have to prove they can become meaningful profit drivers rather than just promising side quests.

Goodwin has earned the right to sell from a position of strength. The question now is whether it can sell strength at the right price.