ASX industrials stock Smartgroup Corporation Ltd (ASX: SIQ) rose an impressive 12% on Friday.
The company provides specialist employee management services to organisations throughout Australia.
Image source: Getty Images
What was behind the rise?
It's likely the stock price rise was due to positive results for its most recent half.
The company reported:
- Revenue up 7% to $159.1 million
- Operating EBITDA up 13% to $63.3 million
- NPATA 12% higher at $38.1 million
- Interim dividend of 19.5 cents per share fully franked, up 11%
Commenting on Smartgroup's performance over the first half of 2025, Managing Director and CEO, Scott Wharton, said:
Smartgroup continued its track record of consistent delivery in the first half of 2025, achieving strong financial momentum across all key metrics. NPATA rose 12% to $38.1 million. Return on equity reached 30.7%, an increase of 1.9 percentage points, reflecting our capital-light business model and robust cash flow conversion.
Surprisingly, the stock price fell more than 3% on Thursday, before rebounding with a bang on Friday.
What did Macquarie have to say?
In a report on Thursday, Macquarie said the ASX industrials stock delivered a stronger-than-expected 1H25 result, with NPATA up 11.6% and EBITDA margins improving to 40%. Novated lease demand remained solid, with settlements up 8%, though yields declined slightly due to softer attachment rates.
SIQ is balancing near-term growth and margins, while investing in the medium-term outlook.
The broker said demand remains strong, driven by operating momentum and ongoing digital marketing and customer engagement uplift. In the report, Macquarie noted management are focused on driving organic growth by addressing low penetration rates within the customer base.
Price target and outlook for SIQ
The broker has an "outperform" rating on this ASX industrials stock on the back of confidence in continued growth
supported by improved novated lease penetration and a customer base of 2.4 million.
It has a 12 month price target of $8.99.
However, after rising 12% on Friday, Smartgroup Corporation shares closed the week at $9.05 each which indicates the stock is trading close to fair value.
This is consistent with valuations elsewhere.
Online broker Selfwealth has an average price target of $9.01, while TradingView has a 12 month price target of $8.90.
