The Altium Limited share price has risen 2.5% today

The Altium Limited (ASX:ALU) share price has grown 2.5%.

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It's been a very strong day for Altium Limited (ASX: ALU) today. The electronic PCB company was one of the day's bigger beneficiaries of the broad ASX recovery because the Donald Trump Administration is apparently working on a trade resolution with China.

Obviously, a trade resolution is better than a trade war. This is particularly important for Altium because it's based in the US and many of its main clients are some of the biggest companies in the world, which rely on a reliable and growing global economy.

The Altium share grew by 2.5% today in response to the encouraging news.

Readers may remember that Altium posted a very impressive set of numbers in its recently-revealed half-year report to 31 December 2017. It included revenue growth of 30%, earnings before interest, tax, depreciation and amortisation (EBITDA) growth of 51%, net profit after tax (NPAT) growth of 51% and earnings per share (EPS) growth of 50%.

The great thing about Altium is that it's becoming more profitable as it gets bigger, the profit margins are increasing. The EBITDA margin increased to 30% from 25.8% and the net profit before tax margin increased to 24% from 20%.

The Altium share price has paused after its huge run-up after revealing its result. But, it could be headed towards more growth over the next few years as management expect to hit the US$200 million revenue target and EBITDA margin target of 35% by 2020.

Foolish takeaway

Altium is trading expensively these days, it's currently valued at 45x FY19's estimated earnings. It isn't a value buy any more, but it could easily beat the market over the next five years if it surprises on the 'upside' with a result over the next year.

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 Scott Phillips.

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