Computacenter PLC (LON:CCC) is an information technology (IT) infrastructure services provider with operations in the UK, Germany, France, Spain, and South Africa. According to the company, their end-to-end solutions help the CIO in addressing his “IT agenda” and help companies maximize the value of IT to their businesses by providing services and solutions at every stage of infrastructure investment.
Services include network security (cybersecurity, infrastructure security, information security management), data center solutions (hybrid cloud services, data and storage management, analytics and big data), and workplace solutions (client computing, enterprise mobility, virtual desktop, etc.)
Financial highlights
In 2018, Computacenter saw a 14.7% increase in its top line which grew to £4.4bn. Adjusted profit before tax increased by 11.3% to £118.2m. Revenues were boosted by strong performance in its Technology Sourcing segment’s revenues which increased 20.5%, especially in its UK Technology Sourcing business (up 17.1%). In Germany, the segment saw a third successive year of significant growth (10.8%). In France, revenues from this segment declined (2.8%) but saw better margins through a “favorable product mix with less software.”
According to the company, Technology Sourcing Services - through which it is able to integrate vendor technology seamlessly into its solutions for its customers - is a fundamental part of its offering to its customers. Other factors that drove the revenue growth in 2018 included economic growth, digital workplace, and cloud, amongst others.
Adjusted diluted earnings per share increased from £65.1p in 2017 to £75.7p in 2018, due to increased earnings generated by the business and a lower diluted weighted average number of shares. The company reduced its number of shares in circulation by 6.97% as a result of a tender offer buyback of ordinary shares which it completed in February 2018.
Below is a glimpse of Computacenter’s key financial highlights for the full year 2018 versus the 5-year averages:
• Revenue: £4.4bn (5Y average: £3.5bn)
• Adjusted profit before tax: £118.2m (5Y average: £96.8m)
• Adjusted diluted EPS: £75.7p (5Y average: £59.04p)
• Dividend per share: £30.3p (5Y average: £23.8p)
• Operating cash flow: £115.2m (5Y average: £95.6m)
Computacenter has a market capitalisation of £1.4bn at the time of writing. On a year-over-year basis, the share price is down by 9%.
Outlook for Computacenter
With mostly rising revenues and earnings over the past 5 years, there’s little doubt that the future looks bright for Computacenter. The numbers are there to prove it. Case in point, the recent 16% hike in its dividend. The FTSE 250 stock offers international exposure and is increasing its geographic footprint. The company recently acquired FusionStorm, a US-based IT solutions company as well as Netherlands-based Misco Solutions B.V.
Analysts expect the EPS to increase to £85.20p from the existing £75.7p by the end of 2019. Of the six analysts covering the company, five recommend it as either a “strong buy” or a “buy.” With demand for IT services in the coming years likely to stay strong, the appeal for a long-term investor is evidently present.
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This contribution is for informational purpose and does not constitute investment advice nor is it an offer to sell or buy, nor is it a recommendation for any security.
Kshitija B.