Market's view on Computacenter
Published on April 2024
- The company has shown a remarkable trajectory over the past three years in comparison to others, with significant foreign earnings suggesting the potential appropriateness of a transatlantic quotation. The highest revenue portion comes from the dollar spectrum, which simplifies accounting in USD.
- Concerns are raised about the company’s underperformance in the UK market, with revenues falling and adjusted pre-tax profits dropping by 27%. Despite these issues, the company had shown good overall performance from 2016 to 2021, with performance levelling off since FY21.
- The company maintains a strong free cash flow and cash balance, which suggests the possibility of share buybacks if the share price remains low.
- The outlook for 2024 is viewed positively despite a challenging macroeconomic environment, with anticipated normalisation in Technology Sourcing volumes and expected growth in Services.
- The half-year financial weighting is explained, which contributed to a temporary market panic, but was generally viewed as a standard fiscal occurrence.
- Recent trading updates have been positive, highlighting the company’s solid balance sheet and the possibility of returning surplus capital to shareholders through special dividends or materially increased dividends, especially given the strength of net funds relative to market cap.
- The company’s consistent strategy and reliability are appreciated and are expected to foster long-term customer retention and satisfaction.
- There is speculative discussion regarding the potential for significant share trading or corporate actions due to the large shareholdings of the founders, which could attract large investors or buyers.
- The CEO’s sale of shares in June negatively impacted investor sentiment.
- The company posted a strong interim financial performance for the half-year ended 30th June, with significant increases in revenue and profits, continuing a long-term trend of earnings growth. The balance sheet remains robust, with substantial cash reserves and net funds, making the company an attractive proposition for long-term monitoring despite some current market reservations.