MENU

Why the Computershare share price is charging higher today

One of the best performers on the ASX 200 on Wednesday has been the Computershare Limited (ASX: CPU) share price.

In morning trade the stock transfer company’s shares were up as much as 6% to $18.84 following the release of its half year results.

What happened in the first half?

During the six months to December 31, Computershare recorded management EBITDA of US$335.4 million on revenue of US$1,146.5 million. This was an increase of 14.3% and 1.7%, respectively, on the prior corresponding period.

On the bottom line, management earnings per share came in 15.5% higher than the prior corresponding period at 35.4 U.S. cents. This allowed the board to declare a 21 U.S. cents per share interim dividend, up 10.5% on the same period last year.

The company’s CEO, Stuart Irving, appeared to be rightfully pleased with the company’s performance during the first half.

He said: “Computershare is performing to plan with Management EPS increasing by 15.5% in constant currency terms. The improvement was primarily driven by ongoing profitable growth in Register Maintenance, margin income gains and a reduced tax rate. These results demonstrate the strength of Computershare’s business during a period of heightened market volatility and global uncertainty.”

Mr Irving also revealed that the execution of its strategic priorities has continued to deliver returns.

He added: “We are investing in our growth engines and building scale in Mortgage Services. Despite the slowdown in US mortgage originations, particularly in Q2, UPB increased to over US$92 billion. We also saw good growth in capital light sub servicing work with new client wins. In the UK, we delivered revenue growth aided by new originations and project fees.”

In addition to this, the company’s work on its cost out programs has been a big positive. Total costs fell US$25 million during the period.

Outlook.

Following the strong first half performance management has upgraded its full year earnings guidance.

It now expects to deliver ~12.5% growth in management EPS in FY 2019, compared to previous guidance for ~10% growth.

Looking beyond FY 2019, the company’s executives appear very positive on its outlook.

Mr Irving said: “With our growth, profitability and capital management strategies serving us well, and the optionality inherent in Computershare continuing to convert into profitability, our commitment to deliver multi year earnings growth is intact.”

Should you invest?

Based on its guidance for management earnings per share growth in the region of 12.5% and current exchange rates, I estimate that Computershare’s shares are changing hands at 19x full year earnings.

Given its strong performance and management’s positive multi-year outlook, I think this is a fair price to pay for its shares.

As a result, I think it could be a good option along with fellow tech shares Bravura Solutions Ltd (ASX: BVS) and Xero Limited (ASX: XRO).

And don't miss these buy-rated shares as well. They have been tipped as great dividend and capital growth options for February.

JUST RELEASED: Our Top 3 Dividend Bets for 2019

NEW! The Motley Fool’s team of crack analysts has just released a timely report revealing the names and codes of their top 3 dividend share recommendations for 2019. Be among the first investors to get access—FREE, for a strictly limited time. You’ll discover the names of 3 hefty dividend paying companies with what our analysts consider to be solid growth prospects for the year ahead…

The first two currently offer fat, fully franked yields and the third is a surprising REIT offering you the chance to become a landlord with none of the hassle! If you’re looking for hot new ideas, look no further. But you do need to hurry. Snap up your free copy now, before supplies run out!

Simply click here to grab your FREE copy of this up-to-the-minute research report on our top 3 dividend share recommendations right away.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of Bravura Solutions Ltd and Xero. The Motley Fool Australia has recommended Computershare. 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.

5 ASX Stocks for Building Wealth After 50

I just read that Warren Buffett, the world’s best investor, made over 99% of his massive fortune after his 50th birthday.

It just goes to show you… it’s never too late to start securing your financial future.

And Motley Fool Chief Investment Advisor Scott Phillips just released a brand-new report that reveals five of our favourite ASX stocks for building wealth after 50.

– Each company boasts strong growth prospects over the next 3 to 5 years…

– Most importantly each pays a generous dividend, fully franked.

Simply click here to find out how you can claim your FREE copy of “5 ASX Stocks for Building Wealth After 50.”

See the stocks now