Empired flags another strong result in fiscal 2019

By Trevor Hoey. Published at Aug 13, 2018, in Special Reports

Name: Empired (ASX:EPD)

Market Capitalisation: $88 million

Last Closing Share Price: 55 cents

Diversified IT services group Empired has delivered an impressive set of numbers in announcing its fiscal 2018 result.

The headline results for the year include revenue of $174 million up 4%, underlying EBITDA of $17 million up 10%, net profit of $4.9 million up 54% and operating cash flow of $15.5 million up from $9.8 million in the prior year.

Net debt was reduced from $13.8 million at 30 June 2017 to $9.3 million at 30 June 2018, and with reduced gearing a number of options remain open to the company in fiscal 2019

Empired benefits from its broad range of expertise which opens up multiple revenue streams across a range of industries, leaving it less prone to cyclical trends.

Exposure to resilient markets

The company provides enterprise IT solutions that improve efficiency, productivity and competitive advantage for our clients.

This is often a resilient business model as expenditure related to these areas is seen as non-discretionary, a necessary investment in order to enhance earnings and remain competitive.

Empired’s clients are medium to large corporate and government organisations within key industries including energy and natural resources, State and Federal Government, finance and insurance, utilities and transport.

The company also benefits from its exposure to government funded essential services work.

Exposure to resilient markets provides earnings predictability, which in view of the company’s upbeat fiscal 2019 guidance is very important.

Although it does remain a speculative stock so investors should still take a cautious approach to any investment decision made with regard to this stock.

Acquisitions could be considered

With a strengthened and balance sheet and robust ongoing cash flow, Empired is well-placed to bid for sizeable contracts.

Management has also indicated that acquisition opportunities could be considered, particularly given the head room available in the company’s balance sheet.

Having recently flagged double digit growth in fiscal 2019, analysts at Bell Potter increased their price target from 65 cents to 70 cents, with the broker implying share price upside of more than 25 per cent relative to Friday’s closing price.

Of course, broker projections and price targets are only estimates and may not be met. Those considering this stock should seek independent financial advice.

S3 Consortium Pty Ltd (CAR No.433913) is a corporate authorised representative of Maven Capital Pty Ltd (AFSL No. 418504). The information contained in this article is general information only. Any advice is general advice only. Neither your personal objectives, financial situation nor needs have been taken into consideration. Accordingly you should consider how appropriate the advice (if any) is to those objectives, financial situation and needs, before acting on the advice.

Conflict of Interest Notice

S3 Consortium Pty Ltd does and seeks to do business with companies featured in its articles. As a result, investors should be aware that the Firm may have a conflict of interest that could affect the objectivity of this article. Investors should consider this article as only a single factor in making any investment decision. The publishers of this article also wish to disclose that they may hold this stock in their portfolios and that any decision to purchase this stock should be done so after the purchaser has made their own inquires as to the validity of any information in this article.

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