A niche little earner in tight telco market
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 info@fatprophets.com.au.
Dial up and up
Frequently Asked Questions about this Article…
Amcom reported FY2013 revenues of $158 million, with normalised net profit of $21 million and earnings per share of 8.5¢. Underlying earnings grew by more than 20% in the year, while revenues rose about 16%.
Amcom's balance sheet was described as robust, with gearing at only 9%, giving the company ample capacity to fund continued growth.
Yes. The board declared a final dividend of 3.5¢ per share for FY2013.
The result was almost entirely driven by organic growth, reflecting Amcom's strong niche position in the competitive telecommunications market and a move to expand annuity‑type revenue streams.
Management projected another double‑digit increase in underlying net profit for fiscal 2014, and the commentary expected that this double‑digit growth rate would continue over the medium term.
Amcom's share price appreciated about 17% over the past six months and roughly 66% over the past 12 months, reflecting investor recognition of its strong earnings track record.
While Amcom has strong fundamentals and an 11‑year run of 20%+ underlying earnings growth, the article suggests that for investors without current exposure it is prudent to wait for a price pullback, as these strengths are beginning to be reflected in the share price.
The analysis and commentary were provided by Brian Han, senior research analyst at Fat Prophets sharemarket research.
Call 1300 880 160
Start a chat
Schedule a call
