Is it time to buy shares of Veda Group Ltd?

Veda Group Ltd (ASX:VED) has reported another record earnings result, and expects similar growth in FY16.

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Data analytics business Veda Group Ltd (ASX: VED) has delivered another year of double-digit growth with its results for the 2015 financial year (FY15) exceeding guidance provided by management.

So What: For the 12 months ended 30 June 2015, Veda Group reported a 12.2% lift in revenue to $338.8 million, compared to $302 million in FY14, while its normalised net profit after tax (NPAT) rose 13.8% to $78.4 million. Notably, most of this growth was achieved in the second half of the year which implies positive momentum going into FY16.

While bolt-on acquisitions contributed to the result, the majority of the group's revenue growth was achieved organically. All business lines grew strongly although there was strong emphasis on the business-to-consumer, or B2C, and Marketing Services business line.

Indeed, revenue from the division grew 37.8% year-on-year to $56.1 million, while the group's Consumer Risk & Identity; and Commercial Risk & Information Services divisions grew by 10% and 6.9%, respectively. The Commercial Risk & Information Services division still made up the bulk of the group's overall earnings, accounting for 39.7% of total revenue (compared to 41.6% in FY14).

Encouragingly, management is confident that similar low double-digit growth can be achieved in FY16, although growth in the group's bottom line (NPAT) should be below that of revenue and earnings before interest, tax, depreciation and amortisation, or EBITDA.

This is largely due to increasing depreciation and amortisation charges as a result of its investment in products and data to grow its business and market position. This is particularly important as the company transitions towards comprehensive credit reporting, which should benefit investors in the long-run.

It said: "For FY16 we expect that capital expenditure as a per cent of revenue will be broadly the same as FY15, before gradually declining in the following years."

Now What: Veda Group is the largest credit reference agency in Australia and New Zealand, and plays an integral role in ensuring its customers only extend credit to those individuals and businesses in a position to make full repayments. Its earnings are also somewhat defensive in nature, which makes it a very attractive option for investors in this uncertain economic environment.

Over the last 12 months or so, the shares have barely moved in price. Currently trading at $2.26, this could be an excellent investment prospect for individuals willing to remain patient.

Motley Fool contributor Ryan Newman has no position in any stocks mentioned. You can follow Ryan on Twitter @ASXvalueinvest. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »