Own Dicker Data? The share price is up 25% in the last month

The ASX IT wholesaler has had a brilliant run of late.

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computer people happy, celebrate share price rise

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The Dicker Data Ltd (ASX: DDR) share price has rewarded shareholders handsomely over the past month.

Many investors would consider it a huge win to amass a return of more than 25% over the course of a whole year. Well, shares in the IT wholesale distribution company have delivered this impressive gain in one month. Meanwhile, the S&P/ASX 200 Index (ASX: XJO) has inched up 0.63% — the comparison is chalk and cheese.

In light of the remarkable run, we take a peek at what has been happening at Dicker Data.

What’s been driving the Dicker Data share price surge?

In the entire last month, only one price-sensitive announcement has left the doors of Dicker Data. As such, we can deduce this announcement likely had a lot to do with Dicker Data’s share price. That one lonely announcement was the company’s third-quarter trading update.

On the day of release, investors voted with their cash, bidding up the company’s shares. In fact, the share price rose nearly 14% on the unaudited results. Despite experiencing impacts from supply constraints, revenue and earnings increased by double-digit figures when compared to the previous year.

Specifically, year-to-date revenue surged 16.1% year on year to $1.7 billion. Meanwhile, the company’s profit before income tax jumped 26% year on year to $76.6 million.

Those impressive results have brought the Dicker Data share price to within reach of its 52-week high. In August, the company reached its peak of $16.60 before being decimated soon after. The market reacted with fierce selling after finding out the company’s chair and CEO David Dicker had sold a chunk of shares.

The company’s shares continued on a downwards trend until turning the corner in early October. Since then, the Dicker Data share price has regained a phenomenal 31.2%.

Current valuation

Following the outstanding performance over the past month, the company now holds a market capitalisation of $2.7 billion. Compared to other companies in the ASX 200, that wedges Dicker Data between Event Hospitality and Entertainment Ltd (ASX: EVT) and BWP Trust (ASX: BWP).

Finally, at its current price, Dicker Data is trading on a price-to-earnings (P/E) ratio of about 44 times. For context, the Australian electronic industry average is 17.4 times.

Should you invest $1,000 in Dicker Data right now?

Before you consider Dicker Data, you'll want to hear this.

Motley Fool Investing expert Scott Phillips just revealed what he believes are the 5 best stocks for investors to buy right now... and Dicker Data wasn't one of them.

The online investing service he’s run for over a decade, Motley Fool Share Advisor, has provided thousands of paying members with stock picks that have doubled, tripled or even more.* And right now, Scott thinks there are 5 stocks that are better buys.

*Returns as of January 13th 2022

Motley Fool contributor Mitchell Lawler 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. 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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