Pace's (PIC) stock jumped around 10 per cent to an all-time high after the set-top box maker grew profits and margins, paid off its debt and hiked the dividend.
The group's strategy of improving efficiency, maintaining PayTV hardware dominance and diversifying into software and services continues to pay off. It has improved its operating margin by 170 basis points since 2011, to 7.8 per cent, and expects the margin to reach 8.5 per cent this year. Strong free cash flow also gave the group, which started 2013 with $163m (£98m) of net debt, a net-cash position by the year-end.
The company’s prospects also look strong. Recently-acquired Aurora Networks, which improves broadband networks, should benefit from operators racing to satisfy customers’ bandwidth demands. Management expects overall sales growth of about 9 this year.
But sales slumped 20 per cent in Europe and the rest of the world, and also fell 20 per cent for its media-gateway business. Chief executive Mike Pulli gives that performance a “C” grade, admitting room for improvement. That goes for the overall business, too. “We’re not popping the champagne yet,” he says.
Broker JP Morgan Cazenove expects EPS of 43.3¢, rising to 50.8¢ in 2015.
| PACE (PIC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 439p | MARKET VALUE: | £1.4bn | |
| TOUCH: | 438-439p | 12-MONTH HIGH: | 439p | LOW: 218p |
| DIVIDEND YIELD: | 0.5% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 174¢* | NET CASH: | £33m | |
| Year to 31 Dec | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share** (p) |
|---|---|---|---|---|
| 2009 | 1.1 | 70 | 17.7 | 1.50 |
| ($bn) | ($m) | (¢) | (¢) | |
| 2010 | 2.1 | 110 | 26.4 | 3.37 |
| 2011 | 2.3 | 55 | 13.2 | 3.75 |
| 2012 | 2.4 | 80 | 19.4 | 4.50 |
| 2013 | 2.5 | 131 | 31.2 | 5.49 |
| % change | +3 | +63 | +61 | +22 |
Ex-div:04 Jun Payment:04 Jul *Includes intangible assets of $530m, or 169¢ a share £1=$1.67 **Dividends will be paid in sterling, equivalent to 2.192p a share (2.029p a share in 2012) | ||||
