Service Stream Limited shares leap 12%: 6 things you need to know

Credit: Jason Howie

The share price of Service Stream Limited (ASX: SSM) has raced over 12% higher to a 52-week high after the group released an impressive interim profit result after the market closed on Wednesday.

Here are six facts you need to know about the results:

  1. Revenue grew to $217.1 million
  2. Net profit after tax increased to $8.8 million
  3. Earnings per share expanded to 2.28 cents per share (cps)
  4. A capital return of 5 cps has been proposed
  5. A fully franked interim dividend of 1 cps was declared. The ex-dividend date is March 16 and the payment date is April 14.
  6. Net cash stood at $37.6 million

Enjoying a tailwind

As a major service provider to the fixed and mobile telecommunications sectors as well as offering services to the energy and water industries, Service Stream is currently enjoying a tailwind to its operations.

The group has won a number of important contracts recently including a wireless design and construction contract with Nokia, a five-year agreement with the National Broadband Network and a contract renewal with Origin Energy Ltd (ASX: ORG) for the provision of solar PV services.

Other high profile customers of Service Stream include AGL Energy Ltd (ASX: AGL), where it provides metering services and Telstra Corporation Ltd (ASX: TLS) where it has a contract for the design and construction of Telstra’s wireless network.

With the share price of Service Stream up 155% in the past year it’s obvious that the market has woken up to the group’s improved outlook. Despite the share price having already rallied hard, the stock continues to trade on an undemanding forward multiple which could mean that there is still upside to the current share price.

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Motley Fool contributor Tim McArthur owns shares in Origin Energy Ltd. 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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