Join our community of smart investors

Spirent sees boost to order intake

Hasn’t yet assumed a financial impact from the coronavirus outbreak
March 6, 2020

Most of the supplies for Spirent Communications’ (SPT) products and services are dual-sourced, in order to protect against potential risk. Thus, while the telecoms testing provider is continuing to monitor the coronavirus outbreak, it has not yet assumed a financial impact on its trading outlook, but continues to anticipate “steady profitable growth” in 2020. 

IC TIP: Buy at 224p

For 2019, order intake climbed by 13.2 per cent to $532m (£409m). This was buoyed by higher levels of multi-year support contract wins, which, in turn, signals improved future visibility.

Within networks and security – Spirent’s largest business area – revenues rose by 12.2 per cent to $320m, with operating profits up by almost a third to $73.9m. Conversely, the group’s connected devices segment reported an 8.2 per cent dip in sales to $72.5m, with operating profits down by about a tenth to $9.5m. But the latter reflected Spirent’s anticipated shift from 4G (fourth-generation mobile) legacy device testing towards 5G – with a new 5G location device test product “ready for market demand” this year.

Bloomberg consensus forecasts are for adjusted EPS of 13.4ȼ in 2020, up from 13.2ȼ in 2019.

SPIRENT COMMUNICATIONS (SPT)  
ORD PRICE:224pMARKET VALUE:£1.37bn
TOUCH:223.5-224p12-MONTH HIGH:264pLOW: 138p
DIVIDEND YIELD:1.9%PE RATIO:23
NET ASSET VALUE:66ȼ*NET CASH:$150m**
Year to 31 DecTurnover ($m)Pre-tax profit ($m)Earnings per share (ȼ)Dividend per share (ȼ)
20154779.62.23.89
2016458-46.0-6.93.89
201745546.64.84.08
201847761.29.14.49
201950489.612.85.39
% change+6+46+40+20
Ex-div:12 Mar   
Payment:1 May   

*Includes intangible assets of $160m, or 26ȼ a share

**Includes lease liabilities of $33m

£1=$1.29