Results in: Are SEEK Limited shares a buy?

The SEEK Limited (ASX:SEK) share price has edged higher in early trade following the release of its half-year results. Should you invest?

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In morning trade the SEEK Limited (ASX: SEK) share price has climbed almost 2% to $20.46 following the release of the job listings company鈥檚 half-year results.

For the six months ended December 31, SEEK posted earnings before interest, tax, depreciation, and amortisation (EBITDA) of $102 million on revenues of $620.3 million. This was a 20% and 26% increase, respectively, on the prior corresponding period (PCP) and excludes significant items.

Key drivers of its top line growth were its Education business and an increase in job listings. This time last year the company reported 35 million monthly visits to its ANZ site and circa 160,000 monthly paid job listings. While the monthly visits has remained the same this year, monthly paid job listings have increased to circa 185,000.

Its International segment has had an even better 12 months. Site visits are up from 400 million to 450 million per month and the number of monthly job listings has increased from 3.5 million to around 5 million. In addition to this, the number of hirer relationships in the segment has risen from 550,000 to 650,000.

Ultimately this led to its Australia and New Zealand Employment segment delivering a 15% increase in both revenue and EBITDA to $196.7 million and $112.2 million, respectively, on the PCP. The segment also benefited from ongoing production innovation and its sales and service initiatives delivering significant value. The company finished the period with a 34% share of placements, approximately 8 times as much as its nearest competitor.

SEEK鈥檚 International segment delivered a 10% increase in revenue to $340.1 million and a 3% lift in EBITDA to $100.7 million. On a constant currency basis this would have been revenue growth of 12% and EBITDA growth of 6% over the PCP. Management appears to be pleased with the result considering its aggressive investment and the weak macro conditions in Latin America. It also advised that its China-based Zhaopin business will continue its aggressive reinvestment focus in order to capitalise on a large market opportunity.

Elsewhere, its Education segment posted revenue of $57.1 million during the half. Compared to the PCP the OES business saw revenue increase 8% and EBITDA rise 4%. SEEK鈥檚 share of this revenue has grown over the period due to a $118.5 million investment to increase its stake in OES from 50% to 80% last year.

On the bottom line SEEK posted a 21.3% increase in reported net profit after tax (NPAT) to $102 million. On an underlying basis, though, NPAT was flat at $114 million. SEEK鈥檚 reported NPAT in the prior corresponding period included charges of $18.6 million related to the ending of VET operations by its SEEK Learning business and the privatisation of Zhaopin.

Finally, SEEK reported earnings per share of 101.1 cents and a fully franked 24 cents per share interim dividend.

Looking ahead, management has confirmed that it is on target to achieve its revenue growth guidance range of 20% to 25%. Furthermore, it has upgraded its EBITDA growth guidance to the range of 14% to 15% and confirmed that it expects to hit the upper end of its reported NPAT guidance range of between $225 million and $230 million, before deducting investments in early stage growth options of approximately $25 million to $30 million.

Should you buy SEEK shares?

Overall I felt the result was in line with expectations and was pleased to see upward revisions to its full-year guidance.

While SEEK certainly isn’t cheap, I think its strong long-term growth potential make it a good buy and hold blue chip option for investors despite the premium.

Motley Fool contributor James Mickleboro owns shares of SEEK Limited. The Motley Fool Australia has recommended SEEK Limited. 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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