Dicker Data (ASX:DDR) share price reaches all-time high. Here’s why

The Dicker Data Ltd (ASX: DDR) share price has reached an all-time high today following the release of a positive Q3 FY20 update.

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The Dicker Data Ltd (ASX: DDR) share price has reached an all-time high today following the company’s release of a positive Q3 FY20 update. At the time of writing, the Dicker Data share price has jumped 10.04% to $9.32.

Let’s see why the the hardware, software and cloud distributor’s shares are breaking new territory today.

Strong September quarter

For the period ending 30 September, Dicker Data announced a robust result leading into its final quarter for FY20.

The company reported total revenue year to date of $1,481.5 million, up 14.9% over the prior corresponding period. This was underpinned by a surge of significant mobilisation to remote working solutions.

Net profit before tax for the 9 months came in at $60.8 million, an increase of 28.3% over September 2019.

Dicker Data said that gross margins were maintained in line with half-year results and that some operating cost leverage was achieved. The company also said that the COVID-19 impact on business performance has been relatively negligent.

The recent quarterly index balance of the ASX saw Dicker Data added to the S&P/ASX 300 Index (ASX: XKO) and S&P/ASX All Technology Index (ASX: XTX).

Outlook

Looking towards the near term, management said that demand continues to remain robust with customers concentrating on business growth strategies post COVID-19. The company will focus on servicing client needs for remote and virtual working stations across its portfolio.

Furthermore, Dicker Data advised it is seeing an uptick in quoting activity and the resumption of larger infrastructure projects. It is expected that growth will stabilise for the second-half of the year.

In the next 12 to 24 months, the rollout of 5G connectivity is forecasted to drive future growth within the technology industry. Dicker Data noted that is sees a tremendous opportunity as artificial intelligence and machine learning technologies begin to accelerate. The company will seek to differentiate its offerings and value proposition to both vendors and its reseller partner base.

In addition, the construction of its new distribution centre is anticipated to be completed at the end of the year. The warehouse space represents an increase of 80% to 23,500sq m, with an additional 20,000sq m available.

The large-scale expansion allows for substantial inventory growth and technology product diversification. In-turn, this will undoubtedly assist Dicker Data in servicing a larger customer base.

Dicker Data share price reaching new highs

The Dicker Data share price has been on the rise since its March lows of $3.90. Pent-up demand has caused its shares to reach a new all-time high today of $9.34, up 139% in just under 7 months.

The company has a market capitalisation of $1.5 billion, a moderately rated price-to-earnings (P/E) ratio of 25, and current dividend yield of 3.3%.

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Motley Fool contributor Aaron Teboneras owns shares of Dicker Data Limited. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. 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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