Class Ltd reveals record March quarter growth

Every three months self-managed superannuation fund (SMSF) software provider Class Ltd (ASX: CL1) discloses how many new SMSF accounts it has won in the previous quarter.

Class reported that the total accounts increased by a record 6,102 accounts to 164,255. AMP Limited (ASX: AMP) continues to migrate accounts from Class, AMP had around 8,800 SMSFs on Class at 31 March 2018. The March quarter growth would have been around 7,000 accounts were it not for AMP’s migration.

Class Super increased by 4,885 accounts to 158,938 and total Class customers increased by 25 to 1,316.

Class Portfolio, the non-SMSF product, grew by 30% to 5,317 accounts and now 30% of Class Super clients now use Class Portfolio. The company said that its advertising campaign has generated a strong response through cross-selling and new business.

Foolish takeaway

The Class share price dropped by 7.56% today in part due to the market volatility. Class has been trading on a high price/earnings multiple for years because of the expected growth for the company.

However, with the price dropping to $2.20 it could actually represent good value because the revenue and profit is still growing at a good pace. Class is now trading at 33x FY17’s earnings, which is the lowest it has been for a very long time.

I’d be quite interested in buying Class shares today because it’s still growing. It could also be a decent income idea because it currently has a grossed-up dividend yield of 3.25%.

If you want growth but you aren’t interested in Class then I’d read up on these hot stocks.

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Motley Fool contributor Tristan Harrison has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Class 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 Scott Phillips.

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