Why has the Vita Group share price suddenly taken off?

Source: Telstra presentation

Shares in Telstra Shop operator Vita Group Limited (ASX: VTG) have rallied 11% on Friday after the group reported strong growth numbers in its interim profit result for the six months ending December 31.

Getting investors excited was the surprise result of earnings before interest, tax, depreciation and amortisation (EBITDA) coming in $2 million above the high end of the guidance range issued in December.

Here are the highlights:

  • Revenues grew 23% to $321 million; Telstra shop like-for-like sales grew 21%
  • Underlying EBITDA surged 465% to $30.4 million
  • The board has declared a 40% uplift in the fully franked interim dividend to 5.76 cents. Shares will trade ex-dividend on March 11 with payment on April 8
  • A net cash position of $10.6 million was recorded at the half

What happens now?

While much of the retail sector is struggling, a few select businesses have been performing well with JB Hi-Fi Limited (ASX: JBH) and Harvey Norman Holdings Limited (ASX: HVN) both reporting solid operating results this February.

With Vita Group having now completed the exit from its Next Byte business, management can focus more intently on its relationship with Telstra Corporation Ltd (ASX: TLS) and growing its Telstra Shops and Telstra Business Centres.

While guidance was not provided, the high-double digit revenue growth achieved in the first half across Vita’s retail, small-medium business (SMB) and enterprise segments sets the scene for a strong second half.

The technology that's going to REPLACE the Internet is already here...

It could be too late to buy Vita Group - that's why it's so important to discover great growth stocks before everyone else does! Dollar for dollar, insiders are calling it one of the biggest new markets in the history of modern business... NOW is the time to get in on the hush-hush industry that could be poised for growth of over 4,463%+ by 2020... And the 1 ASX stock that stands to grow YOUR money right alongside it! Simply click here to learn its name.

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.

Two New Stock Picks Every Month!

Not to alarm you, but you’re about to miss a very important event! Chief Investment Advisor Scott Phillips and his team at Motley Fool Share Advisor are about to reveal their latest official stock recommendation. The premium “buy alert” will be unveiled to members and you can be among the first to act on the tip.

Don’t let this opportunity pass you by – this is your chance to get in early!

Simply enter your email now to find out how you can get instant access.

By clicking this button, you agree to our Terms of Service and Privacy Policy. We will use your email address only to keep you informed about updates to our website and about other products and services we think might interest you. You can unsubscribe from Take Stock at anytime. Please refer to our Financial Services Guide (FSG) for more information.