Capita (CPI) was the biggest riser in the FTSE 100 after bullish half-year numbers sparked broker upgrades. The outsourcing giant reported a 16 per cent jump in underlying pre-tax profit to £238m driven by double-digit organic revenue growth and a solid operating margin.
Capita's bid pipeline - where it has been shortlisted to the last four bidders or fewer - stands at a record £5.7bn. This busy spell is no flash in the pan, either. Capita says that its "prospects" - bids that are not yet in the pipeline - are also at a record. Over half of the bids in the pipeline are expected to reach a decision by the year-end. With Capita currently winning more than two out of three of its major bids, the second half should see some good news on contract wins. Management tells us to "expect a healthy flow of announcements".
Management also says that demand is good across practically all of the sectors in which the group operates with "an awful lot of activity" in central government outsourcing. Moreover, Capita believes that outsourcing to private companies will remain a key part of government policy, whoever wins the next general election.
Broker Investec Securities has increased its full-year adjusted pre-tax profit forecast by 3 per cent to £521m, giving EPS of 64.3p (from £475m and 58.7p in 2013).
| CAPITA (CPI) | ||||
|---|---|---|---|---|
| ORD PRICE: | 1,202p | MARKET VALUE: | £7.9bn | |
| TOUCH: | 1,201p-1,202p | 12-MONTH HIGH: | 1,202p | LOW: 925p |
| DIVIDEND YIELD: | 2.3% | PE RATIO: | 47 | |
| NET ASSET VALUE: | 125p* | NET DEBT: | 164% | |
| Half-year to 30 Jun | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2013 | 1.8 | 158 | 20.1 | 8.7 |
| 2014 | 2.1 | 152 | 18.6 | 9.6 |
| % change | +17 | -4 | -7 | +10 |
Ex-div: 27 Aug Payment: 7 Oct *Includes intangible assets of £2.6bn, or 386p a share | ||||
