Can Electrocomponents Avoid Having (Raspberry) Pi On Its Face?
Connor Campbell | Sep 27, 2017 12:15
Can Electrocomponents (LON:ECM) avoid having (Raspberry) Pi on its face following next Tuesday’s update?
While – like in the first few months of the year – Electrocomponents (LON:ECM) has lacked a bit of momentum since the start of August, a stellar run between early April and mid-July still sees the stock up nearly 30% since 2017 began. Electrocomponents PLC now sits at a current trading price of £6.15
So, where are all the good vibes coming from? Well, though a decent update in February failed to get investors on board, upgraded profit expectations in April, following news of an 8% jump in Q4 group revenue, helped kick-start the stock’s spring surge. Its North American branch was the most successful, seeing a 19% increase in revenue, followed by a 9% rise in emerging markets and a solid 5% growth in Europe.
The stock received another boost towards the end of May, as the company posted its full year results. Reported revenue was up 17.1% to £1.5 billion, leading to a 66.7% increase in headline pre-tax profit to £128 million. Electrocomponents went on to say that it had had an ‘encouraging start to 2018’ and that it was on track to deliver a ‘further £5 million of cost savings’ in the new financial year.
The firm’s most recent update came at the start of July, with a serious acceleration between Q4 2017 and Q1 2018. Underlying group revenue rose 13%, with the Asia Pacific and emerging markets division outshining North America as sales rose 18% to the latter’s 16%. This time out Europe also impressed, more than doubling its growth quarter-on-quarter with an 11% increase in sales.
Investors will want to see similar figures in Tuesday’s Q2 statement. However, Electrocomponents did warn back in July that ‘trading comparatives for all [its] regions will toughen as the year progresses’, meaning the numbers might not be quite as explosive. Sterling’s rapid rise in September may also be worth a mention, especially since the company repeatedly highlighted the impact of exchange rates in its Q1 report.
Electrocomponents PLC has a consensus rating of ‘Hold’ with an average target price of £5.40.
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