SG Fleet Group Ltd looks cheap after reporting 30% jump in profit

Is the market overlooking SG Fleet Group Ltd (ASX:SGF)?

a woman

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Car fleet management and salary packaging company SG Fleet Group Ltd (ASX: SGF) has reported a 29.6% increase in pro forma net profit for the first half of 2015.

The company says it is on track to meet prospectus forecasts of full-year net profit of $39.2 million, after posting a profit of $19.7 million for the six months to December 2014.

Revenues were up 13.3% over the previous year, profit margins rose and the company upped the dividend from 4 cents in the second half of 2014 to 4.725 cents this half year.

SG Fleet says the performance was due to winning operating lease contracts from competitors and introducing a wide range of new products and services to existing customers. CEO Robbie Blau says the company's growth profile will continue to be positively influenced by a structural trend towards outsourcing.

Mr Blau added, "We remain confident we can meet our ongoing objective to achieve double digit profit growth and further margin expansion."

SG Fleet also says it sees significant opportunities outside Australia, in the United Kingdom (UK) and New Zealand, with potential acquisitions in the UK.

At current prices of around $2.03, SG Fleet is trading on a prospective P/E ratio of 12.5x 2015 earnings, and paying a dividend yield of 5.2% fully franked. That appears cheap for a company delivering strong growth, and paying decent dividends.

Motley Fool writer/analyst Mike King doesn't own shares in any companies mentioned. You can follow Mike on Twitter @TMFKinga

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