The Motley Fool

The People Infrastructure share price soars 116% in 12 months

While the S&P/ASX 200 (INDEXASX: XJO) index has enjoyed a record start to 2019, the People Infrastructure Ltd (ASX: PPE) share price has done even better – climbing 116% in just 12 months.

So why is this Aussie workforce management company’s stock suddenly so hot, and can the growth train continue in the second half of the year?

Strong organic growth shows solid operating profile

The People Infrastructure share price hit a 52-week high of $3.36 per share on Friday and soared a further 7% in yesterday’s trade as the company’s capital gains continue to accumulate.

One big driver in the company’s 12-month share price performance has been management’s ability to grow the business both organically and inorganically through strategic acquisitions.

The company reported solid first-half 2019 earnings through to 31 December 2018, headlined by revenue climbing 24.7% higher year-on-year (YoY) to $133 million.

People Infrastructure’s earnings before interest, tax, depreciation and amortisation (EBITDA) rose 35.6% higher YoY to $8.4 million, while adjusted net profit after tax (NPATA) came in 50.5% higher at $6.1 million.

Strategic acquisitions boost share price higher

While business has been humming along nicely for the workforce management group, key acquisitions over the last year or so have also propelled the share price higher.

In March this year, the company announced that it had agreed to acquire leading healthcare business Victorian Nurse Specialists Pty Ltd for $2.5 million, payable on a cash and debt-free basis.

The acquisition was designed to improve the company’s healthcare offering in Victoria, with a number of cross-selling benefits in providing nurses to its disability sector clients and leveraging its combined workforce across the entire sector.

The company also announced that it had acquired the remaining outstanding shares in its existing IT business Recon Solutions and Project Partners for $2.8 million, as it looked to strengthen its overall operating profile.

In mid-June, the People Infrastructure share price surged higher yet again as it announced that it would acquire two leading Queensland healthcare staffing agencies, First Choice and Carestaff. Both acquisitions were completed yesterday.

Overall, People Infrastructure has been a top performer over the last 12 months and currently boasts a market cap of $241 million, which could go higher if the company continues its current growth trajectory later this year.

5 stocks under $5

We hear it over and over from investors, "I wish I had bought Altium or Afterpay when they were first recommended by The Motley Fool. I'd be sitting on a gold mine!" And it's true.

And while Altium and Afterpay have had a good run, we think these 5 other stocks are screaming buys. And you can buy them now for less than $5 a share!

*Extreme Opportunities returns as of June 5th 2020

Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has recommended People Infrastructure Ltd. 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.

Related Articles...

Latest posts by Ken Hall (see all)