The Dicker Data (ASX:DDR) share price is up 80% over the last 12 months

Shares in the ASX IT specialist have been surging over the past year. We take a closer look

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The share price of ASX IT specialist Dicker Data Ltd (ASX: DDR) has surged higher this year, buoyed by news the company is making a key strategic acquisition.

Dicker Data shares set a new 52-week high price of $16.60 on 26 August. They have now slid back down to $13 (at the time of writing). However, it still means the Dicker Data share price has risen a whopping 78% over the past 12 months.

Company background

Dicker Data is one of the most established distributors of computer software and hardware in Australia. It partners with many leading international technology vendors, including Cisco Systems Inc (NASDAQ: CSCO), Intel Corporation (NASDAQ: INTC), Dell Technologies Inc (NYSE: DELL), and Microsoft Corporation (NASDAQ: MSFT).

As an IT distributor, Dicker Data doesn’t sell directly to consumers. Instead, it partners with more than 6,900 resellers across Australia and New Zealand. Dicker Data claims to take a customer-centric approach, and works proactively with its resellers to help grow their businesses.

Recent news affecting the Dicker Data share price

The Dicker Data share price took off following the announcement it was acquiring the Exeed Group for $68 million.

Exeed is the second-largest IT distributor in New Zealand, with FY21 full-year normalised earnings before interest, tax, depreciation, and amortisation expenses (EBITDA) expected to be around $15 million. By comparison, Dicker Data (on its own) reported EBITDA of $51 million for the first half of FY21.

Crucially, the deal will give Dicker Data a major foothold in the New Zealand market. Annual revenues for the combined entities is expected to be NZ$500 million.

Dicker Data chair and CEO David Dicker described the deal as “a very satisfying outcome”. Investors liked it too, with the Dicker Data share price rocketing 16% higher the day following the announcement.

What about the financials?

In the wake of the Exeed acquisition news, Dicker Data also released its interim FY21 financial report, covering the six months ended 30 June 2021.

Revenues were up 6.3% versus the prior corresponding period (to $1.07 billion). This might seem like only a modest increase, but the company pointed out it experienced a spike in demand in the first half of FY20. A global shortage of computer chips also had a negative impact on sales over the first half of FY21.

The company said, despite the ongoing chip supply issues, orders were still being placed by resellers, with no cancellations. Dicker Data also stated it was identifying other new growth areas and opportunities. These included return-to-work solutions, 5G technology, and cloud technology.

Dicker Data share price snapshot

Despite the company’s reassurances, Dicker Data shares plunged following the release of the company’s interim results. After surging to new highs on the back of the news of the Exeed acquisition, the Dicker Data share price fell almost 19% on the day of the results announcement.  

Since then, the shares seem to have stabilised at around $13. Nervous shareholders will now be hoping that chip supply issues won’t continue to hurt the company’s top-line growth over the second half of FY21 and beyond.

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Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Motley Fool contributor Rhys Brock has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of and has recommended Dicker Data Limited and Microsoft. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has recommended Intel and has recommended the following options: long January 2023 $57.50 calls on Intel and short January 2023 $57.50 puts on Intel. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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