The Altium Limited (ASX: ALU) share price has increased over 65% since the start of 2019, with a strong half-year report released in February triggering a sharp jump higher.
Since the 2018 annual report, Altium has reported its seventh straight year of double-digit growth in its revenue and profit.
Increases in revenue and profit figures for the half-year were 24% and 57.6% respectively. In addition, EBIT and EBITDA were up 55% and 57.6%.
Strong profitability figures as such resulted in an earnings per share jump of 57% which caused a strong reaction to Altium's share price.
Complementing Altium's strong profitability figures is the organic increase in cash from operations by 80%, up to US$26.8 million.
Altium currently trades at a high price to equity ratio of 68 times earnings. Despite this premium, the industry trades over 84 times earnings which allows the Altium share price to show value.
Furthermore, factoring Altium's earnings per share growth into its current valuation allows investors to see stronger value in the Altium share price.
How does Altium's future look?
With impactful technology as a megatrend currently in play, Altium has the right business with strong tailwinds. The increase in smart connected devices continues to grow into the foreseeable future, particularly as we progress into an era of the Internet of Things (IoT).
By 2025, Altium expects to achieve market dominance for designing printed circuit boards and have 100,000 subscribers to its software. From the half-year report, Altium reported a 9% increase in total subscribers to 39,179.
The 49% regional revenue growth was a stand-out performance for Altium in China. To reach the 100,000 subscribers by 2025, Altium has begun aggressively expanding operations in China.
In addition, Altium is transitioning its software from perpetual to terms-based licensing. This pay-as-you-use model will likely result in stronger profitability figures for future financial reports.
Foolish takeaway
Currently, Altium is on track to achieve its revenue target of $200 million by 2020. Although Altium may appear expensive when compared to other companies, its potential growth allows for a premium.
If Altium is capable of dominating the market for printed circuit boards worldwide, then the Altium share price still has plenty of room to grow.
Here's another ASX company that is poised for growth as part of $US22 billion boom industry.
