The $122 million information technology (IT) services company DWS Ltd (ASX: DWS) has reported a lacklustre full year profit result today.
Investors have responded to the news by selling the stock down over 5% to 94 cents; in contrast the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) is enjoying gains of 0.5% as at lunchtime Monday.
Results
DWS reported a net profit after tax of $10.4 million which was a decrease of 19% on the prior year.
On an earnings per share basis, this profit result equates to 7.9 cents per share (cps), implying a price-to-earnings ratio of 11.9x.
The group also announced a final fully franked dividend of 3.75 cps. When this is added to the interim dividend of 3.75 cps, it implies that DWS is trading on a fully franked dividend yield of 8%.
Highlights
Financial performance showed a turnaround in the fourth quarter thanks to a restructuring program which improved utilisation and reduced overheads, with strong client demand in Victoria.
The group also acquired Symplicit which added 44 consultants, bringing DWS's total consultant numbers up to 517.
DWS continues to grow its revenues within the banking, financial, government and defense industry sectors which together account for over 50% of total revenues across the group.
Buy, Hold, or Sell?
DWS is obviously trading on a high and appealing dividend yield if it is maintainable and likewise the stock is on an undemanding multiple assuming the earnings base is maintainable. Given commentary made by management suggests a pick-up in performance has occurred over the last few months there can be some hope for shareholders that the future is looking brighter for DWS and that the current share price represents reasonable value.
