The Computershare Limited (ASX: CPU) share price has gone bananas following the release of its half year report.
Here are the key takeaways from Computershare's half year report:
- Revenue rose 7% to $999 million
- An interim 30% franked dividend of 17 cents per share was declared
- 'Management' profit per share rose 4.4% to 27.1 cents
- Free cash flow of $150 million, up 4%
Computershare is Australia's leading share registry business, connecting shareholders to the companies they own.
"Having set clear strategies to deliver sustained earnings growth it is encouraging to see our execution is on track and earnings growth is emerging," CEO Stuart Irving said. "Excluding FX movements and margin income, which was again affected by lower interest and reinvestment rates, Management EBITDA increased by 10.6%, a solid performance."
Looking ahead, Computershare is seeking to grow its mortgage services and employee share plans businesses, as well as cutting costs.
"We have commenced a fundamental review of our cost structure," Mr Irving added. "We affirm our expectation that stage 1 and 2 should deliver between $85m – $100m of annualized savings."
Buy, hold or sell
Computershare is a stable business with a strong competitive advantage. However, it's not a gangbusters growth business since it seems to rely on acquisitions and things outside its control (interest rates, currencies, etc.) to buoy results.
Having held the company's shares for a few years, I was disappointed that the company's share price didn't move much. I had hoped rising U.S. interest rates would be a catalyst for higher returns. The interest rate changes didn't come until I had sold out — and still haven't really moved the share price. That's no fault of the company's — I should have come up with a better reason to own its shares.
