Results: Why the Wellcom Group Limited (ASX:WLL) share price popped today

The Wellcom Group Limited (ASX: WLL) share price rose 4% on Wednesday to $4.48 following publication of the company’s annual results yesterday afternoon. Revenues rose 9% to $108 million and net profit after tax (NPAT) rose 10% to $11.7 million.

Wellcom earned 29.92 cents per share and declared dividends of 46 cents per share during the year. The dividends were elevated by a 25 cent per share special dividend, “normalised” dividends were 21 cents per share or approximately 70% of profit was paid out as dividends.

The company ended the year with $2 million in net debt, consisting of $8 million in cash and $10 million in total debt.

During the year, management reported several new contract wins including customers from Countdown (Woolworths NZ), News Corp, and SPC Ardmona. Wellcom also continued development of its Knowledgewell software, implementing this company-wide across its European, US, and ANZ operations.

Revenue grew strongly across all geographic regions and management stated they would continue to target organic growth through Wellcom’s social, digital, and video production services. During 2019, Wellcom intends to increase its marketing activity in North American and the United Kingdom, as well as developing its capabilities in Wellcom Malaysia. The company will also consider making further acquisitions if opportunities arise.

With a market capitalisation of around $190 million, Wellcom appears to be priced at around 17x earnings. This is not expensive for what seems a well-run company with several opportunities to continue its growth in several countries. I would consider investigating Wellcom further at today’s prices.

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Motley Fool contributor Sean O'Neill has no position in any of the stocks mentioned. The Motley Fool Australia has recommended Wellcom Group 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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