Crash! Is the party over for the CSG Limited share price?

Shares in print and business technology solutions company CSG Limited (ASX: CSV) have dropped around 7% on Monday to $1.40 after the release of the group’s interim financial results. Inclusive of today’s falls the stock has now slumped around 24% since the beginning of January.

Here’s what investors learnt today:

  • Revenues grew 8% to $117 million
  • Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) were 12% higher at $17.3 million
  • Underlying net profit after tax expanded 10% to $11.1 million
  • CSG Finance division recorded lease receivables growth of 25% to $236 million
  • CSG’s ‘Technology-as-a-service” product suite expanded non-print equipment to 12.6% in Australia
  • An interim unfranked dividend of four cents per share (cps) was declared. CSG’s shares will trade ex-dividend on February 18 and payment is scheduled for March 9

Management provided the following outlook guidance for the full year to investors:

Forecast revenue of over $225 million, implying growth year on year of 14%

Guidance for the full year of between $38 million and $42 million in underlying EBITDA

A final dividend of five cps

Time to buy?

With the share price falling by around 24% since the start of January, this $440 million company is arguably becoming more attractively priced but is perhaps still not cheap enough for conservative investors.

Based on analyst consensus forecasts for financial year 2016 (source: Thomson Consensus Estimates) the stock is trading on a price-to-earnings multiple of 18.2x and a dividend yield of 6.4% which looks reasonable but arguably not enticing.

In comparison, other providers of equipment finance such as FlexiGroup Limited (ASX: FXL) and Thorn Group Ltd (ASX: TGA) are trading on single-digit forward multiples.

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Motley Fool contributor Tim McArthur owns shares in FlexiGroup Ltd. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. 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.

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