Mobile Embrace Ltd reports profit growth of 73%: Should you buy?

The share price of Mobile Embrace Ltd (ASX: MBE) is flat this morning, despite the mobile payments and marketing company reported upbeat interim profit results.

Here’s what you need to know about Mobile Embrace’s operations for the six months ending December 31:

  • Revenue leapt 99% to $28 million
  • Earnings before interest, tax, depreciation and amortisation (EBITDA) gained 141% to $4.1 million
  • The EBITDA margin expanded to 15%, up from 12% in the prior corresponding period
  • Net profit after tax jumped 73% to $2.6 million
  • The group’s cash position was $6.5 million as at February 8
  • The group’s global m-commerce operations are performing strongly
  • $14.3 million was invested in growth initiatives over the six month period

What’s next?

Mobile Embrace operates in the fast growing sector of mobile devices where it offers international direct carrier billing and international marketing services.

Exposure to this sector has management forecasting solid growth in revenue and earnings for the remainder of the financial year both from organic growth and via the contribution from recent acquisitions.

While no specific figures were provided, management stated that the business, “is in excellent shape and well placed to deliver a strong FY2016 result providing solid momentum into FY2017. We expect to report on our operational developments over the coming months and provide more definitive guidance into the current half.”

Investors have backed the information technology sector over the past year with many stocks enjoying significant support. Certainly the growth potential of many firms in the sector is exciting with the share prices of both Mobile Embrace and Touchcorp Ltd (ASX: TCH) gaining over 60% and Mint Payments Ltd (ASX: MNW) over 30% in the past 12 months.

Despite the sector tailwinds however, not all companies will ultimately be winners and nor are all technology stocks a buy at any price.

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Motley Fool contributor Tim McArthur 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. 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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