Here’s why the Gentrack Group Ltd share price is going nuts in 2017

The Gentrack Group Ltd (ASX: GTK) share price has climbed slightly higher today following a promising update from the company.

Gentrack Share Price


Source: Google Finance

Who is Gentrack Group?

Gentrack Group is a $340 million software business specialising in developing solutions for energy utilities and airports. As can be seen above, the New Zealand company has grown strongly in recent years.

Since the company’s products are ingrained in client systems and processes, Gentrack’s revenue is relatively stable. This allows it to pay a dividend of 2.7%. 

Why is the Gentrack share price flying higher in 2017?

Gentrack shares have risen strongly in recent months following the acquisition of Junifer Systems in the UK and other promising updates. Today, Gentrack’s share price is trading higher following the announcement of two acquisitions, including:

  • CA Plus Ltd: Gentrack has agreed to acquire 75% of CL Plus for $NZ 11.4 million, with a three-year earn out for the remaining 25%. CA Plus complements Gentrack’s Airport Division, with its software used by clients to optimise and audit retail revenue in airports. Airport owners typically charge a rent plus a percentage of sales. CA Plus’s software enables airports to monitor and charge variable rates to retailers.
  • Blip Systems A/S: Gentrack will acquire 79.81% of Blip Systems for $NZ 8.4 million, with another three-year earn out. The Danish company has created software used to monitor passenger movement and traffic within airports, which is useful for capacity projections and monitoring waiting times.

Both acquisitions appear highly complementary to Gentrack’s business and are expected to be earnings per share accretive from its 2017 financial year onwards. Additionally, they extend Gentrack’s customer base.

Buy, hold or sell Gentrack

In my opinion, despite its recent share price rise, the valuation of Gentrack shares appears more favourable than that of other ASX technology shares like XERO FPO NZ (ASX: XRO) and iSentia Group Ltd (ASX: ISD). I’d rate Gentrack a buy for the long run. 

Are you thinking of buying Gentrack shares? You should try these 3 blue chip dividend share ideas first. They have been hand-picked by our expert analyst.

Just, click here, enter your email address and we'll send you our expert analyst's research report -- completely free.

No credit card details required.

Motley Fool Contributor Owen Raszkiewicz does not have a financial interest in any company mentioned. Owen welcomes and encourages your feedback. You can follow him on Twitter @OwenRask.

 The Motley Fool Australia owns shares of Xero. 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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.