Why the IVE Group (ASX:IGL) share price is surging 11% today

Shares in the creative comms group are surging in morning trade after a positive performance update. Here are the details.

| More on:
Two women happily smiling and working on their computers in an office

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The IVE Group Ltd (ASX: IGL) share price is on the rise during morning trade.

This follows the release of the print communications company's business update and earnings guidance for the 2021 financial year.

At the time of writing, IVE Group shares are swapping hands for $1.38, up 11.29%.

How is IVE Group performing?

According to this morning's release, IVE Group advised ongoing business momentum is continuing its run into the second-half of 2021.

In particular, the 5-year Australian Community Media contract is expected to be fully transitioned into the business by the end of next month. It's worth around $20 million per year for IVE Group.

As well, the Spotlight Retail Group has now become a significant letterbox distribution client across Australia and New Zealand.

IVE Group's customer retention also delivered a robust performance, with healthy contract renewals. The most significant deals of note included L'Oréal and Westpac Banking Corp (ASX: WBC). The latter signed on for another 5 years with an estimated contract value of $20 million per annum.

The company revealed its other revenue sectors, such as travel, catalogues, exhibitions and events, are consistent with H1 FY21.

For the end of April, IVE Group declared a cash balance of $95.1 million. This is after the company's share buyback program ($5.2 million) and interim dividend payout ($10.3 million).

Projected net debt for the upcoming end of this financial year is anticipated to come in at between $90 million and $100 million.

Investors are seemingly upbeat about the company's performance, sending IVE Group shares significantly higher during Wednesday's session.

Outlook for FY21

In response to the impacts COVID-19 had on the business, management focused on streamlining its cost base.

As a result, underlying earnings before interest, tax, depreciation and amortisation (EBITDA) is forecast to be in the range of $98 million to $100 million.

IVE Group share price snapshot

Over the last 12 months, IVE Group shares have lifted by more than 38%. However, year-to-date performance has gone in reverse, with the company's shares down by around 4% so far in 2021.

Based on today's share price, IVE Group has a market capitalisation of roughly $200 million, with approximately 144 million shares outstanding.

Motley Fool contributor Aaron Teboneras has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Communication Shares

Smiling couple looking at a phone at a bargain opportunity.
Communication Shares

Telstra stock pays a massive 7% dividend, and now could be a great time to buy

The dividends from Telstra could be very rewarding in the coming years.

Read more »

A man wearing a colourful shirt holds an old fashioned phone to his ear with a look of curiosity on his face as though he is pondering the answer to a question.
Communication Shares

Is the Telstra share price good value in July?

Here's what one leading broker is saying about the telco giant.

Read more »

A female executive smiles as she carries out business on her mobile phone.
Communication Shares

Telstra share price lifts off alongside its mobile pricing plans

ASX 200 investors are bidding up the Telstra share price today.

Read more »

A couple makes silly chip moustache faces and take a selfie on their phone.
Communication Shares

Down 16% over 12 months, the Telstra share price could explode 20% from here!

ASX brokers are clamouring over Telstra shares right now.

Read more »

Man on a laptop thinking.
Communication Shares

How come the Telstra share price crashed 16% in FY 2024?

Telstra shares massively underperformed the ASX 200 in FY 2024. But why?

Read more »

A man holds his hand under his chin as he concentrates on his laptop screen and reads about the ANZ share price
Communication Shares

Do Telstra shares have a strong outlook for FY25?

Is this ASX telco stock about to make a roaring comeback in the next financial year?

Read more »

A woman standing in a blue shirt smiles as she uses her mobile phone to text message someone
Communication Shares

ASX expert: Time to buy Telstra shares

This broker reckons Telstra is heading for big gains, and soon.

Read more »

A female executive smiles as she carries out business on her mobile phone.
Broker Notes

Buy Telstra shares due to its 'excessive' discount

This telco giant's shares could be unnecessarily cheap according to Bell Potter.

Read more »