Havetodays earnings report thrown up some overlookedgems worth closer inspection?
Equiniti Group
Specialist technology outsourcer Equiniti Group (LSE: EQN) has had a good month, its share pricerising nearly 15% in that time, andtodays half-year report has handedit a furtherlift.Revenue growth was a decent5.9%, withorganicrevenue growth of 4.3%. It also reported12% revenue growth from cross-selling and up-selling to its top 32 key accounts. Net debt has dropped from 471m to 261m, a fall of 44%, reducing company leveraging from 5.5 to 2.9. Acquisitions have been integrated well.
Equinitis profits have benefitted as it has signedlongstanding contracts with many of the biggest firms in the country, giving ita broad base of revenue streams. As a share registrar it may benefit from the weaker pound, as this mayattract further overseas buyers in the wake of the ARM Holdings deal. The companycan perform wellin troubled economic times, whenmany companies raise emergency cash through rights issues. Today, chief executive Guy Wakeleyhailed a strong top line and profit progression whilst reducing leverage. Forecast earnings per share growth of 12% this year and 9% next, and a valuation of 12.48 times earnings, make the stock worth a look.Especially with the yield forecast to rise from 0.4% today to a more impressive 2.8%.
Paragon of virtue
Property firmParagon Group of Companies (LSE: PAG) posted a 12.1% rise in underlying profits to 109.9mfor the nine months to 30 June. That solidgrowthgiven that normaltrading had been disrupted by the stamp duty surchargeon buy-to-let property purchases and by Brexit uncertainty. The referendum result could still swing a nasty surprise, although management said its too early to know for sure.
Despite the surcharge,buy-to-let lending for the nine months to 30 June rose 21.2% to989.6m, although we might expect to see that slow in the future, as landlord caution grows. Paragonspipelinehas dipped to 339m from 350.6m at the start of the quarter. Ithas protected itself witha disciplined approach to pricing and credit, hikingminimum affordability tests in January 2016 to reflect looming cuts to landlord tax relief. The buy-to-let marketcould bebumpy for some time, which isreflected in Paragonscurrent valuation of 7.51times earnings.
Get the power
Energy storage and clean-fuel company ITM Power (LSE: ITM) posted afull-year pre-tax loss of 4.36m this morning, a mild improvement on the 5.72m it lost a year ago, helped by a 300,000increase in revenue to 1.93m. The 35.79m market cap minnowcurrently has a total pipeline of 16.32m, with 15.81m of projects under contract and a further 0.51m of contracts in the final stages of negotiation.
Markets respondedpositively, with the share price upmore than 3% in the morning, helping continue the share price recovery of recent months. However, attodays 16p, its still well below its 52-week high of 30p. Clean fuel should be a global growth area and ITM has struck a hydrogen fuel contract with Toyota and a strategic forecourt siting partnership with Shell. In May, ITM hit the headlines bylaunching Londons first HyFive hydrogen refuelling station and itstwo working power-to-gas reference plants in Germany are attracting global attention. But early stage technology like this is a risky power playfor investors.
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Harvey Jones has no position in any shares mentioned. The Motley Fool UK has recommended ARM Holdings. We Fools don’t all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.
