Computershare Limited reports mixed results: Should you buy?

Computershare Limited (ASX:CPU) has announced a flat result for the half year ending 31 December, 2014.

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Leading global registry maintenance company Computershare Limited (ASX: CPU) has reported an uninspiring set of interim profit results for the half year ending 31 December, 2014. The result does not appear to be unexpected however, with the shares trading flat on Wednesday following the earnings release.

The key numbers

Given Computershare's global footprint, the group reports its results in US dollars (USD), here's what you need to know…

  • Operating Revenues declined by 1.1% to US$966.1 million (at constant exchange rates)
  • Management net profit non-cash items slipped 2.1% to US$160.1 million at constant exchange rates and 6.3% to $160.6 million at actual exchange rates
  • Management earnings per share (EPS) declined 1.8% to USD 28.88 cent per share (cps)
  • The partially franked dividend was raised by one cps to AUD 15 cps.

Outlook

The global operations of Computershare mean that the group is exposed to a range of exchange rate movements and interest rate environments. This is currently having a detrimental effect on the company with management forced to downgrade expectations for full year EPS from "around 5% higher" than the prior year to "modestly higher". Accompanying the downgrade, management cited "the recent material strengthening of the USD and weakening of interest rate markets" as the culprits.

Computershare remains a high quality business with many appealing characteristics including defensive earnings, growth options, leverage to equity markets and competitive scale advantages. This makes the stock certainly one for the watchlist and indeed any near term share price weakness could create a great buying opportunity.

Motley Fool contributor Tim McArthur does not own shares in any of the companies mentioned. The Motley Fool owns shares in Computershare.   

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