Veda Group Ltd skyrockets: Is it too late to buy?

Data analytics business Veda Group Ltd (ASX: VED) today delivered its first full-year results since listing on the ASX in December 2013. In what proved to be a fantastic year for Veda, the company managed to exceed its prospectus forecast for revenue, EBITDA and NPAT, while its dividend was also twice as large as what had been anticipated.

For the year ending 30 June 2014, revenue was up 12.4% to $302 million (FY13: $268.6 million), while operating earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 21.7% to $128.4 million (FY13: $105.5 million). Net profit after tax (NPAT) also jumped a remarkable 141.5% to $22.7 million, compared to the $9.4 million recorded in FY13.

The results, which allowed the company to declare a final dividend of 4 cents per share (compared to prospectus forecast of 2 cents), were very well received with investors pushing the share price up 8.2% early in the session to $2.24.

So What:

Veda’s outstanding performance for the year reflects the strength of each of its business lines and in particular its Consumer Risk & Identity and Commercial Risk & Information Services segments. These divisions grew 11% and 13% year-on-year respectively, combining for 75% of the group’s overall revenue.

Even more pleasingly, it looks as though that growth is set to continue through FY15 with the company’s CEO, Nerida Caesar, providing a very positive outlook. She expects all business lines to continue performing strongly to deliver: “At least double digit EBITDA growth in FY2015 and broadly commensurate growth in NPAT”.

Now What:

As a shareholder of Veda Group, I couldn’t be any more pleased with today’s result. Not only did they smash prospectus forecasts for earnings and profit growth, but they also confirmed my expectations of further growth for the coming years.

Veda is set to continue benefiting from tightening credit reporting standards as well as the introduction of the Comprehensive Credit Reporting regime which will enable credit bureaus like Veda to provide more in-depth data regarding customers’ loan histories. This should translate into even greater growth.

While it isn’t necessarily a bargain at today’s price, I believe it is a very reasonable price to pay for such a high quality business with such strong future prospects.

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I own the stock, and think you should take a look too.

Motley Fool contributor Ryan Newman owns shares in Veda Group Ltd.

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