Altium Limited share price almost hits $20

The Altium Limited (ASX: ALU) share price has risen by 3.79% so far today to $19.70, it briefly reached $19.95 earlier.

The electronic PCB software company finished on Monday, before its report, at a share price of $14.88. This means it has gone up an astonishing 32.4% in just a few days.

This strong, positive reaction has happened because Altium reported a very impressive set of numbers.

Altium reported revenue was higher by 30% to US$62.3 million, earnings before interest, tax, depreciation and amortisation (EBITDA) increased by 51% to US$19 million and net profit after tax (NPAT) grew by 51% to $14.9 million.

Earnings per share (EPS) increased by 50% to 11.48 cents and management increased the dividend by 18% to AU$0.13 per share.

The Internet of Things is gathering pace and more engineers are designing increasingly complex products. All of Altium’s main product segments increased revenue by double digits.

Economies of scale are growing for Altium, leading to profit margins improving. The EBITDA margin increased to 30% from 25.8%. The underlying EBITDA margin was 33.1% according to management, if one-off restructuring and acquisition costs are excluded.

Altium has been one of the best performing shares on the ASX every year since 2011 and it could keep going as management are predicting that revenue could hit US$200 million by 2020 and a EBITDA margin of 35%, which would be a huge boost to the bottom line.

There aren’t many ‘futuristic’ shares on the ASX that are both profitable and growing at a fast pace.

Foolish takeaway

I’m not surprised to see Altium touching $20, although I wasn’t expecting it to happen so quickly. Altium is trading very expensively now but if it delivers on its targets then today’s price could actually be good value.

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Motley Fool contributor Tristan Harrison owns shares of Altium. The Motley Fool Australia owns shares of Altium. 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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