Much to the delight of its shareholders, the McMillan Shakespeare Limited (ASX: MMS) share price has rocketed higher by 9% to $11.68 today following the release of a solid half-year report.
Here's what you need to know:
- Revenues from ordinary activities increased 3% to $251.2 million on the prior corresponding period.
- Net profit after tax increased 4% to $40.4 million.
- Interim dividend of 31 cents per share.
- Underlying earnings per share of 56 cents.
The solid result was largely driven by the strong performance of its Asset Management segment. Revenue in the segment grew 6% on the prior corresponding period to $104 million, with segment net profit after tax growing at an even quicker rate of 18.4% to $7.9 million.
This helped offset a disappointing and sharp decline in profit from its Retail Financial Services. Due to a change in the mix of financing and uncertainty regarding potential regulatory changes, segment profit fell 15% to $5.3 million.
Finally, its Group Remuneration Services segment posted a slight drop in revenue, with segment profit after tax remaining mostly flat at $28.2 million.
Should you buy McMillan Shakespeare shares?
Whilst overall growth is by no means explosive, I feel confident that if the strong performance of its Asset Management business continues it will position the company for mid-single digit earnings growth over the next few years.
So with its shares changing hands at just under 11x trailing earnings, McMillan Shakespeare could be a good option for investors. Especially those in search of income. At the current share price its shares provide investors with a generous fully franked trailing 5.6% dividend.
Investors have a lot of choice in the industry with the likes of SG Fleet Group Ltd (ASX: SGF) and Smartgroup Corporation Ltd (ASX: SIQ), but at the current price I think McMillan Shakespeare could prove to be the pick of the bunch.
