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Being in the right place at the right time has helped technology company Endace notch up a sizeable increase in revenue in the first half, all thanks to there being no end in sight to the increase in network traffic and security issues affecting companies. What's more, Endace looks well positioned to benefit as more companies find out the limitations to what current network monitoring systems can do.
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Endace believes companies are facing a ticking time bomb when it comes to current systems of network monitoring. The ID&P (intrusion detection and prevention) market is expected to show sustained growth as businesses migrate their networks to faster systems. Chief executive Mike Riley said that as networks get faster, companies will need specialist hardware as well as software. So, while revenue still primarily comes from selling its big-ticket products, such as its NinjaProbe appliance, which give companies total control over network monitoring, Endace now generates over 20 per cent of its sales from the annuity business of providing technical support to existing clients.
Broker Panmure Gordon has edged up its full-year profit before tax estimate to $4.69m (£2.3m), giving EPS of 17.3c, rising to $8.96m and 32.5c, respectively in 2008-09.
ENDACE (EDA) |
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|---|---|---|---|---|
| ORD PRICE: | 485p | MARKET VALUE: | £ 72m | |
| TOUCH: | 480-490p | 12-MONTH HIGH: | 485p | LOW: 136.5p |
| DIVIDEND YIELD: | nil | PE RATIO: | 54 | |
| NET ASSET VALUE: | 126 cents* | NET CASH: | $5.7m | |
| Half-year to 30 Sep | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (c) | Net div per share (c |
|---|---|---|---|---|
| 2006 | 6.2 | 0.9 | 4.10 | nil |
| 2007 | 8.4 | 1.0 | 4.74 | nil |
| % change | +34 | +18 | +16 | - |
£1=$2.07 *includes intangible assets of $3.6m, or 24 cents a share |
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Endace is doing well, but on valuation grounds a rating of 30 times 2009 earnings estimates means there is no room for slip-ups. So we reiterate our view (437p, 5 Sep 2007) that the shares are high enough.
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