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Computacenter powers on

A mixed client base and new working practices help Computacenter drive forwards
September 9, 2021
  • First time hitting £3bn revenue in a 6-month period
  • Adapting well to the pandemic

Computacenter (CCC) had a strong 2020, with the remote working trend aiding margins and reliable public sector clients filling the gap left by struggling corporates. The 2021 interim results show few signs of the robust performance from last year abating. Compared to the same period in 2020, revenue was up 29 per cent to £3.2bn and adjusted profit before tax soared 59 per cent to £119m.

The IT services provider’s business model has adjusted well to circumstances throughout the pandemic. Corporate clients were drawn back into the fold in the interim period, with revenue increasing by 30 per cent. Public sector revenues grew by 27 per cent. 

A focus on availing of remote engineers rather than external contractors helped with driving a group gross margin of 13 per cent which is a slight increase from last year. The US and German businesses exhibited strong growth, with the US revenue increase of 165 per cent to $1.3bn (£940m) spurred on by the contribution of Pivot, which was the IT solutions provider acquired last year. 

All is not completely rosy, however. Continuing product shortages in the industry impacted supply. A stronger pound hit profitability, although this was mitigated by currency hedge gains. The net cash position from the end of 2020 is no more with net debt at £29m. 

Consensus forecasts support a 17th year of continuous growth in EPS, with a FactSet estimate of 140p for 2021. The group is trading on a forward price/earnings multiple of 21 times, which appears expensive compared to the five-year FactSet average of 16.9 but is more reasonable when set against peers like DATAGROUP (Ger:D6H) which has a valuation of 27 times. The forward rating doesn't represent too much of an asking price given growth prospects. Buy.  

Last IC view: Buy, 2,348p, 16 Mar 2021

COMPUTACENTER (CCC)   
ORD PRICE:3,089pMARKET VALUE:£ 3.7bn
TOUCH:3,088-3,096p12-MONTH HIGH:3,098pLOW: 2,081p
DIVIDEND YIELD:1.80%PE RATIO:19
NET ASSET VALUE:560p*NET DEBT:4%
Half-year to 30 JunTurnover (£bn)Pre-tax profit (£m)Earnings per share (p)

Dividend per share (p)

20202.4672.446.012.3
20213.1811572.516.9
% change+29+59+58+37
Ex-div:23 Sep   
Payment:22 Oct   
*Includes intangible assets of £272m, or 222p a share.