MENU

Why I think Praemium Ltd looks set to keep growing in 2018

The Praemium Ltd (ASX: PPS) share price has gained almost 60 per cent in the past year and it appears it will keep going up in 2018.

Praemium, which provides portfolio administration, investment platforms, and financial planning tools to the wealth management industry, has emerged as a company which investors are increasingly taking notice of.

In financial year (FY) 2015 the company, which listed on the ASX in 2006, reported its first year of profit with $2.2 million EBITDA.

For FY 2016 Praemium reported EBITDA of $3.8 million and net profit before tax of $1.5 million.

And Praemium kept up the momentum in FY 2017 with the company announcing another year of record profit which came in at about $2.2 million before tax.

The software company now has 9 offices globally and 800 clients covering $100 billion in assets and recently announced that it had surpassed $7 billion in platform funds under administration.

But while the company does offer promise for 2018, some investors may be put off by the fact that shares in Praemium are going for more than 400 times the company’s trailing earnings, significantly above the industry average of about 30 times earnings.

On the other hand, when compared to Onevue Holdings Ltd (ASX: OVH), with its shares trading for more than 600 times earnings, Praemium may not appear so expensive.

However, another investment platform provider, Hub24 Ltd (ASX: HUB), with its shares changing hands for about 30 times earnings may be more appealing to some.

Hub24 Ltd, with more than $6 billion in funds under administration, is not too far off Praemium.

And while it appears that Praemium is well positioned to continue its growth story in 2018, it also seems that Hub24 may represent better value coupled with the opportunity of further growth.

For FY 2017 Hub24 reported a profit of $20.8 million, up 91 per cent on the previous year.

As such, those who are interested in getting in on the investment platform provider space may do well to take a closer look at Hub24 before jumping on Praemium.

The 66,826.77% "wonder share" that shows no sign of stopping

JUST RELEASED! Check out our brand-new free report, "One Stock to Buy and One to Sell in the Age of Amazon"... revealing our #1 recommendation for the future of online retail in Australia AND the #1 stock our experts are convinced you should unload immediately...

Plus, you'll even discover one special bonus recommendation! It's a mind-blowing 66,826.77% winner that we believe will rocket into 2018 and beyond.

Your copy of this timely new report is completely free, so don't miss out. Discover the 66,826.77% wonder stock now. Enter your email address here to discover your brand-new FREE report.

Motley Fool contributor Steve Holland has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Onevue Holdings Ltd. 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.