The share price of software provider Integrated Research Limited (ASX:IRI) has risen 2.2% to $1.63 in early Friday trade following this morning's announcement that it has appointed an Interim Chief Executive Officer (CEO).
Integrated Research has appointed the company's current Chief Financial Officer (CFO), Peter Adams, as its Interim CEO to be effective from February 18, 2019 when the current CEO John Merakovsky will step down from the position.
Mr. Adams has been employed as the company's CFO since March 2008 and has over 25 years' experience in a number of senior finance and accounting roles with Infomedia, Renison Goldfields and Transfield Pty Ltd prior to joining Integrated Research.
Difficult 2018
This has been a difficult year for Integrated Research despite adding new blue chip customers such as BHP Billiton Limited (ASX: BHP) and Coles Group Limited (ASX: COL). 2018 was a subdued year in comparison to the impressive earnings growth investors of Integrated Research have been accustomed to over the last several years.
In FY18, revenue was flat at $91.2 million and net profit after tax grew by only 4% to $19.2 million. The company's softer than usual performance was attributed to a cyclical downturn in the company's Infrastructure line and underperformance in its Payments line.
However, the news was not all bad with the weakness in those two business lines offset by growth from the Unified Communications and Consulting Services lines.
Foolish takeaway
The share price of Integrated Research has fallen 58% in 2018. The share price fell initially on fears of overvaluation and then on a softer than expected profit result. Furthermore, the last two months have seen the resignation of the company's CEO, and the retirement from the Board as both the Chairman and a Non-Executive Director of the company's founder and largest shareholder, Steve Killelea.
Although Mr. Killelea will stay on as a consultant for 2 years, the market has not reacted positively to these departures with the company's share price falling by around 32% since the first of these announcements.
Shares of Integrated Research are trading for slightly less than 14 times the estimated 11.95 cents in earnings per share projected for FY19. This is the cheapest valuation the company has traded for in a very long time. However, given the departure of key personnel and the flattish performance in FY18, it might be best for investors to sit on the sidelines until the company reports its interim results in February.
