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Here’s why Iress Ltd has soared more than 9% today

What: The best-performing stock amongst the S&P/ASX 200 Index (INDEXASX:XJO) today is financial software provider Iress Ltd (ASX: IRE). While the index is following Wall Street’s lead overnight and rallying around 0.5%, Iress has reported a very strong interim profit result which has sent the share price up over 9%.

So what: The growth in revenue and earnings has been driven by the inclusion of the UK division for a full period. On an underlying basis, net profit after tax has jumped 47.9% to $38.2 million for the six months.

The earnings growth has flowed through to dividend growth with the board declaring an interim dividend of 16 cents – an increase of 18.5% on the prior interim dividend.

Once again the driver of growth was the Wealth Management division which recorded a 17% increase in revenues and a 26% increase in profits (excluding the contribution from the new UK business). In contrast revenue within the Financial Markets division was flat and profit actually fell.

Now what: Highlighting the offshore expansion of Iress, revenue contribution from outside Australia increased to a 48% share, compared with just 21% in the previous corresponding period (pcp). Segment profit contribution from overseas soared to 30%, compared with just 6% in the pcp.

Management has commented that the second half has commenced positively with expectations that profit for the full year should exceed FY 2013 by between 20% and 25%. It’s an impressive outlook and if it is achieved it’s quite possible the stock will continue to rally despite Iress already being priced on a high multiple of earnings.

Another great growth story

Iress is certainly growing its earnings, however it could be getting a little bit on the expensive side for some investors - that's a reasonable concern to have and it's why I'm so keen on this small but ultra promising ASX company that The Motley Fool has issued a firm "BUY" rating on... you can get the name and code FREE right now. Click here for your free copy of "The Motley Fool's Top Stock for 2014."

Motley Fool contributor Tim McArthur owns shares in Iress Ltd.

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