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FDM's impressive growth is priced in

Demand for tech-savvy 'mounties' is growing
March 14, 2017

FDM 's (FDM) novel business model has continued to deliver impressive growth in 2016, increasing operating profit by a fifth to £35.4m for the year. The group hires and trains graduates, ex-military personnel and others in areas such as cyber security and office IT, before placing them with client companies. Once trained, these employees are known as 'Mounties'. The group had 2,705 mounties assigned to clients at the end of 2016, up from 2,022 last year and ahead of analyst expectations running into these results. The group has invested heavily in training academies, with global capacity up 36 per cent since December 2015.

IC TIP: Hold at 710p

North America continued to grow at an impressive rate, with mountie headcount rising 60 per cent and adjusted operating profit up 55 per cent, following investment in an academy in Virginia and expansion of existing academies in New York and Toronto. Chief financial officer Mike McLaren says that if President Trump tightens restrictions on the use of H1B visas for foreign workers, the group's domestic worker base would be even more attractive to US companies.

Analysts at Stockdale are forecasting adjusted profit before tax of £41.3m, giving adjusted EPS of 28.1p for 2017 (from £37.5m and 25.8p in 2016)

FDM (FDM)
ORD PRICE:710pMARKET VALUE:£763m
TOUCH:685-710p12-MONTH HIGH:735pLOW: 425p
DIVIDEND YIELD:2.8%PE RATIO:29
NET ASSET VALUE:50p*NET CASH:£27.8m

Year to 31 DecTurnover (£m)Pre-tax profit (£m)Earnings per share (p)Dividend per share (p)
201210315.9nana
201310619.914.1na
2014†12319.012.77.5
2015**16129.420.516.5
201618935.324.419.6
% change+18+20+19+19

Ex-div: 25 May

Payment: 16 Jun

*Includes intangible assets of £19.5m, or 18p a share

**DPS excludes special dividend of 5p †FDM relisted in June 2014