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Computershare shares point higher on earnings beat & share buy-back plan

This morning share registry and fund administration business Computershare Limited (ASX: CPU) posted a net profit of $415.7 million on revenue of $2.41 billion for the financial year ending June 30, 2019 (All figures in US$). The profit and revenue are up 38.5% and 4.8% respectively. 

Earnings per share also came in 12.8% higher at 71.46 cents, which is a slither above prior guidance for growth around 12.5%.

The group will pay a final dividend of A$0.23 cents per share to take full year dividends to A$0.44 cents per share on a yield of 2.9% plus full franking credits at a share price of $15.27. The company also announced a A$200 million on-market share buy-back plan to deliver in FY 2020.

Computershare’s CEO, Stuart Irving CEO, said: “The sound execution of our purposefully designed strategies continues to deliver. Management EBITDA margins increased to 28.4%, up 130 basis points, and return on equity again exceeded 26%. Given the large contribution from significant one off events that increased FY18 results, we are pleased to surpass this benchmark and deliver ongoing growth.”

A high return on equity and rising EBITDA margins are the hallmarks of a good quality company, although the group declined to provide any specific guidance for FY 2020.

One point to watch is debt with leverage at 1.84x on the back of growth investments and the acquisitions of Equatex and LenderLive over the year. 

Shares are up 4.5% to $15.96 in the pre-market. 

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Motley Fool contributor Tom Richardson has no position in any of the stocks mentioned.

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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.

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