Catapult Group International Ltd reports huge growth: Is it too late to buy?

Catapult Group International Ltd (ASX: CAT) continues to amaze me.

The company, which provides the hardware and software used by professional athletes around the world to track their fitness and monitor their risk of injury, has produced stellar growth figures since its initial public offer (IPO) in December 2014.

That trend continued this morning when the technology business reported a new all-time record sales result for the June quarter which it confirmed had exceeded management’s expectations.

Unit orders had increased 54% compared to the previous corresponding period (pcp). It sold 2,862 units during the latest quarter which exceeded the previous quarterly sales record (set in the March quarter) by 37%.

For the full-year, total units ordered rose to 8,354 while total contract value (TCV) soared 74% compared to the 2015 financial year (FY15) to $29.4 million. Incredibly, both figures exceeded guidance of 8,000 total units and $24.5 million TCV, which were announced in November 2015.

Pleasingly, more of the sales were based on subscriptions which bodes well for the business in the long-run. It had 8,715 units under subscription, which was 26% higher than the previous quarter.

Catapult expects its strong FY16 to translate into revenue of $18 million to $19 million, with an adjusted EBITDA loss between $3.8 million and $4.8 million (EBITDA = earnings before interest, tax, depreciation and amortisation). Further, the company believes that its recent acquisitions of XOS Technologies and PLAYERTEK will help to propel its pro forma EBITDA into positive territory in FY17.

What’s more, it is quickly expanding its client base at the sub-elite level which should help to drive growth as well. Among the clients it acquired during the June quarter were University of Georgia and the University of Southern California, as well as the Houston Texans (NFL) and the Japan Table Tennis Association.

Of course, one quick glance at Catapult’s share price chart shows you that investors are well and truly aware of this growth story. Shares have rocketed 615% since their 2014 IPO and are up 3.7% today, alone.

Source: Yahoo! Finance

Source: Yahoo! Finance

That said, analysts expect Catapult Group to become profitable in 2017, forecasting earnings per share of just 2 cents, according to Yahoo! Finance (it is unclear when this estimate was last updated, and whether it includes the impact of its recent acquisitions or strong end-of-year performance).

Regardless, it does indicate that Catapult’s shares aren’t the bargain they once were. While that doesn’t necessarily mean investors should avoid the stock, it is something they should keep in mind before rushing out to buy based on the company’s latest earnings results.

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Motley Fool contributor Ryan Newman 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.

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