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Why the Adacel Technologies Limited share price rocketed 620% in 2015

Credit: Doug

The Adacel Technologies Limited (ASX: ADA) share price came off the boil yesterday but I doubt shareholders will mind too much. In fact, the company is one of the top-performing shares so far in 2015.

With a market value less than $200 million, Adacel Technologies is likely a name unfamiliar to most investors. The company is a global software provider for the aviation industry and operates in two markets, being flight simulation and training and air traffic management.

Adacel Technologies has now been profitable for four consecutive years. Revenue grew 26.6% during the 2015 financial year (FY15) to $41.9 million, while net profit before tax (NPBT) hit $5.9 million, an increase of more than 200% on the prior year. Notably, the company has forecast a 50% rise in NPBT for the 2016 financial year as well.

At the same time, the company increased its cash balance by $5.4 million to $7.6 million and was still able to pay a dividend during the year.

With a performance like that, it’s easy to see why investors have taken so strongly to Adacel Technologies’ shares in 2015. In fact, the share price has risen an astonishing 620% since the beginning of the year to trade at $1.80, down from a recent high of $2.22.

Although the shares mightn’t look ‘cheap’ per se, trading on a trailing price-earnings ratio of 36x last year’s earnings, if the company can continue to grow earnings at these impressive rates that could push the P/E ratio considerably lower. Any further declines in the group’s share price would certainly be intriguing.

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Motley Fool contributor Ryan Newman has no position in any stocks mentioned. Unless otherwise noted, the author does not have a position in any stocks mentioned by the author in the comments below. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool Australia has no position in any of the stocks mentioned. 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.

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