Computershare share price plunges 6% following FY22 results

Let's analyse the results.

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Key points

  • Computershare posted FY22 results after the bell yesterday 
  • It was a mixed set of results that were marred by both market volatility and macro-economic headwinds 
  • In the last 12 months, the Computershare share price is up more than 46% 

The Computershare Limited (ASX: CPU) share price is trading down today following the release of the company's FY22 annual results.

At the time of writing, Computershare is down 6% at $23.86, having just reached 52-week highs of $26.07 on 22 July.

Computershare earnings ahead of expectations

Key takeouts include:

  • Management revenue $2.6 billion, up 12% year on year
  • Management EBIT $530.9 million, a gain of 19% from the same time last year
  • Return on invested capital of 12.2% increasing 130 basis points
  • Margin income of $186.5 million that saw a 74% year on year increase
  • Management EPS of 58.3 cents
  • Declared final unfranked dividend of 30 cents per share

What else happened during this period for Computershare?

The company said that its global investments pushed management revenue to grow over 12% for the 12 months.

However, transaction-based revenues in its corporate actions and employee share plans segments were impacted by market volatility in H2 FY222.

Furthermore, "expected recoveries in bankruptcy and class actions have yet to come through," the company said.

To that point, its US mortgage services division printed a weaker result that was behind expectations.

It also generated $322 million in free cash flow for the year and improved its leverage ratio to 1.64 times, below target ranges.

Management commentary

Speaking on the results, CEO Stuart Irving said:

Computershare has delivered full year management earnings ahead of guidance. Growth in client fee income has offset weaker transaction revenues. With strong cost controls, we were able to manage the
impact of inflation as we benefited from rising interest rates.

I am pleased to report our acquisition of CCT in November 2021 continues to exceed expectations. We are making good progress integrating the business and delivering the expected synergy benefits.

What's next for Computershare?

The company forecasts management EPS growth of 55% for FY23, despite a projected increase in costs and inflationary pressures.

It estimates margin income to come into around $520 million for the year.

In the last 12 months, the Computershare share price is up more than 46%.

Motley Fool contributor Zach Bristow has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. 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 Scott Phillips.

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