Investors who pushed shares in Spirent Communications up 30 per cent in May had high expectations for these first-half results and the telco testing kit firm didn't disappoint, beating revenue and profit expectations by 5 per cent and 10 per cent, respectively. Adjusting for the low tax charge in the previous year, underlying EPS surged 36 per cent to 4.92¢ (3.10p).
Broker Panmure Gordon was impressed enough to raise full-year revenue estimates 5 per cent to $480m and upgrade EPS forecasts 10 per cent to 11.5¢. This looks well founded given Spirent's optimistic view of prospects. Growth was strong in data connectivity and LTE testing products, and surprisingly in Europe, where revenue jumped 25 per cent to $38.4m. There was also a strong recovery in order intake for positioning products, up 24 per cent year on year, and the firm's hopes for new products aimed at testing cloud computing applications, ethernet-based mobile backhaul and wi-fi positioning bodes well for the future.
Free cash flow of $33.4m was 18 per cent lower than in the same period last year due to increases in working capital, capex and the tax charge, but Spirent still ended the half with net cash of $183m, an increase of $75m since the year-end.
SPIRENT COMMUNICATIONS (SPT) | ||||
|---|---|---|---|---|
| ORD PRICE: | 131p | MARKET VALUE: | £886m | |
| TOUCH: | 131-132p | 12-MONTH HIGH: | 136p | 69p |
| DIVIDEND YIELD: | 1.0% | PE RATIO: | 23 | |
| NET ASSET VALUE: | 52¢* | NET CASH: | $183m | |
| Half-year to 4 Jul | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (¢) | Dividend per share (p) |
|---|---|---|---|---|
| 2009 | 208 | 35.5 | 4.53 | 0.55 |
| 2010 | 227 | 48.8 | 5.08 | 1.69 |
| % change | +9 | +37 | +12 | +25 |
Ex-div:11 Aug Payment:16 Sep *Includes intangible assets of $112m, or 16.5¢ a share £1:US$$1.59 | ||||
