A niche little earner in tight telco market
What's new Amcom has once again delivered 20 per cent-plus growth in underlying earnings in fiscal 2013. Revenues grew 16 per cent during the year to $158 million, while, on a normalised basis, net profit and earnings per share jumped more than 20 per cent to $21 million and 8.5¢, respectively.
The company's balance sheet remains robust, with gearing at only 9 per cent. This provides ample capacity to fund the continuing growth of the business. In the meantime, the board of directors declared a final dividend of 3.5¢ a share.
Outlook What impressed us most about the result was it was almost entirely driven by organic growth. This is a testament to the company's strong niche position in the competitive telecommunications market. Management has sufficient confidence to project another double-digit increase in underlying net profit in fiscal 2014 - a growth rate we expect will continue for the medium term.
Price Amcom's share price has been performing exceptionally well on the stock exchange, appreciating by 17 per cent and 66 per cent in the past six months and 12 months, respectively. We believe this reflects investors' increasing recognition of Amcom's impressive earnings track record.
Worth buying? For the 11th consecutive year, Amcom has delivered 20 per cent-plus growth in underlying earnings. The company is also successfully fortifying its earnings profile with expanding annuity-type revenue streams. However, these strong fundamentals are beginning to be reflected in the price. Consequently, we believe it is prudent for those without exposure to wait for a pull back in price.
Brian Han is senior research analyst at Fat Prophets sharemarket research. To receive a recent Fat Prophets Report, call 1300 881 177 or email firstname.lastname@example.org.
Dial up and up
InvestSMART FORUM: Come and meet the team
We're loading up the van and going on tour from April to June, with events on the NSW central & north coast, the QLD mid-north coast and in Perth, Adelaide, Melbourne, Sydney and Canberra. Come and meet the team and take home simple strategies that you can use to build an investment portfolio to weather any storm. Book your spot here.
Want access to our latest research and new buy ideas?
Start a free 15 day trial and gain access to our research, recommendations and market-beating model portfolios.Sign up for free