3 of my highlights from earnings season

Overall I thought the recent earnings season was a success with the majority of companies either living up to expectations or exceeding them.

While there were a lot of highlights during the month, three that stood out for me are summarised below:

Altium Limited (ASX: ALU)

In FY 2018 this electronic design software company achieved revenue growth of 26% to US$140.2 million and a 34% increase in net profit after tax to US$37.5 million. While this was a strong result, I was mostly impressed with what management had to say about the future. The company is targeting 100,000 active subscribers of its flagship product, Altium Designer, before 2025. Management believes that achieving this will compel key stakeholders within the manufacturing and supply chain industry to support its agenda to transform electronic design and its realisation. This could make it well worth hanging onto those shares for the long term.

Appen Ltd (ASX: APX)

In the first half of FY 2018 Appen reported revenue of $152.8 million, underlying EBITDA of $25.6 million, and underlying net profit after tax of $17.8 million. This was an increase of 106%, 87%, and 119%, respectively, on the prior corresponding period. While some of this growth was driven by its acquisition of the Leapforce business, organic revenue growth was still a solid 47%. The strong first half led to management lifting its full year guidance, which I still feel is reasonably conservative. While I think its shares are about fair value now, I wouldn’t be in a rush to sell them if I were a shareholder.

Super Retail Group Ltd (ASX: SUL)

Another highlight for me was the turnaround of this retail conglomerate. Super Retail posted a 4.2% increase in revenue to $2,570 million and a 26% lift in net profit after tax to $128.3 million. This allowed the board to increase its full-year dividend to 49 cents, which equates to a yield of 5.3% based on its current share price. Pleasingly, the company looks set for another strong year in FY 2019. Management advised that each of its businesses has achieved positive like for like sales growth so far this year. I feel Super Retail could still be a great option for investors even after its post-earnings run.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Altium, Appen Ltd, and Super Retail 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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