Data#3 Limited rockets on profit update: Is it a buy?

Data#3 Limited (ASX:DTL) shares surged higher by 8.5% in early trade after another bumper profit result. Is this technology consulting services company a buy?

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One of the biggest movers in morning trade has been technology consulting services company Data#3 Limited (ASX: DTL).

Its shares surged higher by as much as 8.5% in early trade following the release of its provisional half-year net profit before tax result.

According to the release management expects half-year net profit before tax (NPBT) to be $8 million, up 31% on FY 2016's half-year NPBT of $6.1 million.

At its AGM in November the company projected NPBT in the region of $7 million and $8.5 million. Pleasingly today's announcement puts its provisional result at the upper end of its range.

Today's gain means Data#3's share price has now risen a massive 55% in the last 12 months. I can't say I'm surprised by the rise either with the level of growth the company has been exhibiting.

In FY 2016 the company delivered full year net profit after tax of $13.8 million, up 30.4% year on year. To carry this momentum through into FY 2017 is very impressive and I believe it is a testament to the great work management has done.

At around 18x trailing earnings Data#3 looks to be great value even after its rapid rise and especially compared to peers Melbourne IT Limited (ASX: MLB) and SMS Management & Technology Limited (ASX: SMX).

Whilst my pick of the industry would still be RXP Services Ltd (ASX: RXP), Data#3 wouldn't be far behind after this market update.

Motley Fool contributor James Mickleboro 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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