Integrated Research Limited issues profit guidance. Here’s what you need to know

What: At 5:25 pm on Wednesday evening, infrastructure and unified communications software developer Integrated Research Limited (ASX: IRI) released a market announcement to the ASX titled ‘Profit Guidance’.

The statement noted that the company is anticipating both record revenue and record net profit after tax (NPAT) for the financial year ending 30 June 2016.

The guidance stated that revenue of between $81 million and $85 million is expected to be recorded, representing growth of between 15% and 20%. NPAT of between $15.3 million and $16 million is also expected, representing growth of between 7% and 12%.

So What: Integrated Research’s share price touched a one-year low back in February after the group underwhelmed the market with an interim result which reported growth in revenue to $39 million but a decline in NPAT to $6.2 million (compared with the prior corresponding period).

The full year guidance implies that the company has achieved a much better profit performance in the second half.

Now What: It will be interesting to see how the market reacts to the ‘Profit Guidance’ on Thursday. Integrated Research enjoyed a currency tailwind in the first half, so analysts will be running the numbers to try and determine what effect currency had on the group’s second half results.

At the mid-point of guidance, Integrated Research would appear to be trading on a price-to-earnings (PE) ratio of 23 times. While plenty of the company’s peers including iSentia Group Ltd (ASX: ISD) and Altium Limited (ASX: ALU) are also trading on similarly high PEs, investors will ponder whether Integrated Research’s constant currency growth rates justify its PE multiple.

How 1 Man Turned $10K Into Over $8 Million

Could software stocks be your road-to-riches? Discover how one man turned a modest $10,600 investment into an $8,016,867 fortune. Learn more about this man and how you can start down the path toward financial independence. Simply click here to learn more.

Motley Fool contributor Tim McArthur has no position in any stocks mentioned. 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.