Veda Group Ltd (ASX: VED) yesterday released what was a very impressive set of results for its full-year ending 30 June 2014. Revenue, EBITDA and net profit all came in well above prospectus forecasts, thanks in large part to strong growth in its two major segments, namely Consumer Risk & Identity and Commercial Risk & Information Services.
The data analytics group's shares have risen strongly too. While they are up 6.3% since their closing price on Tuesday, they have risen a massive 20.2% since bottoming out at $1.83 late in July. Although the shares are no longer as cheap as they have been in the past, I believe Veda Group still presents as a solid buy.
To begin with, there are a number of macroeconomic factors currently at play which, to me, indicates that strong growth should continue for the foreseeable future. Firstly, low interest rates should continue to drive credit growth which would only boost demand for Veda's products. Meanwhile, the Australian economy remains vulnerable to a downturn, particularly with unemployment remaining high and Chinese growth slowing. That will mean companies will pay more attention to maintaining a strong balance sheet and ensuring the customers they are extending credit to are capable of paying their debts.
In addition to the forces outside of Veda's control, the company is in a prime position for organic growth too. The recent introduction of the Comprehensive Credit Reporting (CCR) regime will allow Veda to store a far greater range of data on Australian individuals and businesses, including the nature of their loans and their repayment histories. This will improve the quality of its product offering.
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As it stands, the company expects "at least double digit EBITDA growth in FY2015", but I believe the company's avenue for growth extends far beyond this financial year. Currently priced at $2.20, Veda Group could make for a solid addition to your portfolio today.
