Energy Action (ASX: EAX) has released 2013 results. Main highlights:
- Revenue up 28%
- Net profit up 26%
- Earnings per share up 12% to 17c (after adjusting for the share issue component involved in the Ward Consulting acquisition – to be transacted in September 2013)
- Dividend per share up 20% to 8.65c, fully franked
- Operating cashflow up 39%
As well, return on equity improved marginally to 40%, the company remains debt free and future contracted revenue is growing strongly.
Energy Action operates in a highly fragmented industry (basically energy brokers) and has a leading role with the development of the Australian Energy Exchange (AEX) and its Activ8 suite of consulting services.
The Energy Exchange division (which is a reverse auction platform) held 1,390 successful auctions over 2013, up 14% from 2012. Average contract duration was 27 months.
The Activ8 division saw a growth in clients of 16%, with average contract duration of 50 months.
Foolish takeaway
The market welcomed Energy Action's release with the share price firming to $3.25 — placing the stock on projected 2014 price earnings of 16, and a yield of 3%. It's not cheap, however, the company is estimated to have only 6% of the available market, allowing plenty of scope for organic growth. In addition management has said further earnings accretive acquisitions/mergers may be considered. Energy Action is an attractive longer term buy.
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Motley Fool contributor Peter Andersen owns shares in Energy Action.
