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Profit report: Why the PWR share price is falling today

This morning PWR Holdings Ltd (ASX: PWR) reported its half-year results for the period ending December 31 2018. Below is a summary of the results with comparisons to the prior corresponding half year.

  • Net profit after tax of $3.139m, up 53%
  • Revenue of $24.76m, up 22%
  • EBITDA (operating income) of $5.04m, up 31.5%
  • EBITDA margin of 20.3%, compared to 18.8%
  • Earnings per share of 3.14 cents, compared to 2.06 cents, up 53%
  • Interim dividend of 1.6 cents, compared to 1.1 cents
  • $6.8 million cash on hand and no net debt

The PWR share price is down 3.4% to $3.38 on the back of what looks a strong profit report, with the share price still up 36% over the past year.

PWR makes specialist and market-leading engine cooling parts for high performance and professional motor racing cars. Before and since its November 2015 initial public offering at $1.50 per share it has a consistent track record of revenue, profit and dividend growth backed up by a seemingly strong management team well aligned to shareholders.

As such it should tick the boxes for small-cap investors willing to take on more risk in the pursuit of outsized returns. One key risk being its existing valuation with it trading on a very high multiple of trailing earnings.

Others in the automobile and car parts space such as Bapcor Ltd (ASX: BAP) delivered weaker-than-expected results on the back of Australia’s weakening macro back drop.

PWR’s continued strength goes to show how it’s a niche business not so exposed to the economic cycle.

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Motley Fool contributor Tom Richardson owns shares of Bapcor.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of and has recommended Bapcor. 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.