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Time to revisit Micro Focus cash point

The takeover of Attachmate has revitalised Micro Focus and cash returns are back on the agenda.
February 4, 2016

Investors hungry for a bumper cash return should consider Micro Focus (MCRO). The enterprise software titan's transformative acquisition of Attachmate has revitalised its growth prospects by strengthening its presence in markets such as cyber security. Moreover, as debt levels fall, it looks set to resume its famously chunky cash returns to investors within the next two years.

IC TIP: Buy
Tip style
Income
Risk rating
Medium
Timescale
Medium Term
Bull points
  • Attachmate deal creates growth prospects
  • Big yield and cash returns set to resume
  • Shares are cheaply rated
  • Improving sales and profit growth
Bear points
  • Tepid trading in core business
  • Weaker cash conversion

Micro Focus offers a broad range of software products that modernise organisations' ageing mainframes and servers, allowing them to communicate with the latest tablets and cloud-based applications and ensuring those historical investments don't go to waste. The company has a stellar track record of generating tonnes of cash and recycling excess funds back to investors via "returns of value", or special dividends. Indeed, it has returned over £554m to shareholders via dividends, share buybacks and four cash returns since March 2011.

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