A year ago, Spirent Communications (SPT) was plunged into a full-year loss due to falling demand for its wireless division, leading the company to incur a $69m (£50m) impairment charge. The testing specialist is now back in the black, underpinned by a rise in the adjusted operating margin from 10.2 per cent to 13 per cent, which helped to drive EPS ahead of analysts’ expectations. Investors were also cheered by news of a 5ȼ special dividend, judging by a double-digit rise in the share price on results day.
Despite a strong performance overall, revenue for networks and security – the largest segment – dipped 0.5 per cent, while adjusted operating profit fell 7 per cent. This stemmed from "softness" in high-speed ethernet testing, as customers shifted towards new 400G platforms – although this is expected to recover during the second half of 2018.
Lifecycle service assurance won 15 new contracts of at least $1m each, helping to drive a 10 per cent rise in sales and 60 per cent growth in adjusted operating profit. Meanwhile, the connected devices business swung from an adjusted operating loss to a profit, thanks to effective cost-cutting.
Prior to these figures, analysts at Stifel expected adjusted cash profit of $101m and EPS of 7.3ȼ in 2018.
| SPIRENT COMMUNICATIONS (SPT) | ||||
| ORD PRICE: | 121p | MARKET VALUE: | £741m | |
| TOUCH: | 120.6-121.2p | 12-MONTH HIGH: | 130p | LOW: 90p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 35 | |
| NET ASSET VALUE: | 57.8ȼ* | NET CASH: | $128m | |
| Year to 31 Dec | Turnover ($m) | Pre-tax profit ($m) | Earnings per share (ȼ) | Dividend per share (ȼ) |
| 2013 | 414 | 39.1 | 5.1 | 3.22 |
| 2014 | 457 | 24.1 | 3.4 | 3.54 |
| 2015 | 477 | 9.6 | 2.2 | 3.89 |
| 2016 | 458 | -46.0 | -6.9 | 3.89 |
| 2017** | 455 | 46.6 | 4.8 | 4.08 |
| % change | -1 | - | - | +5 |
| Ex-div: | 15 Mar | |||
| Payment: | 4 May | |||
*Includes intangible assets of $164m, or 26.7ȼ a share **Excludes proposed special dividend of 5ȼ per share £1=$1.39 | ||||
