What: Leading global registries business Computershare Limited (ASX: CPU) has fallen 12.9% today after reporting full year results which disappointed the market.
Based on 'Management Results' which adjust for one-offs and non-cash items, here are the key figures:
- Total operating revenue down 2.3% to US$1.98 billion
- Management earnings before interest, tax, depreciation and amortisation (EBITDA) up 2.5% to US$554.1 million
- EBITDA margin up 1.3% to 28%
- Management net profit after tax (NPAT) down 0.7% to US$332.7 million
- Free cash flow down 12.5% to US$343.7 million
So What: Computershare's global operations have their positive and their negative influences. The expansion opportunities and higher growth rates which can be achieved offshore are certainly a positive; however at times operating on a global scale also creates headwinds – a situation which is apparent at the moment.
For example, Computershare has faced headwinds from certain currency movements which have led to a lowering of reported revenues. For this reason it can be useful to review the group's constant currency results to get a better feel for how the underlying business is performing…
On a constant currency basis, management revenue actually increased by 1.4% and management EBITDA was up a more respectable 5.3%.
What now: The board has declared a dividend of 16 cent per share (in Australian currency) with the stock set to trade ex-dividend on 18 August. Shareholders can expect to receive payment on 15 September.
The low yield and low franking available certainly do not make Computershare an attractive yield play, rather investors own Computershare for its growth potential.
At today's exchange rate, the US 59.82 cents per share (cps) in management earnings per share equates to 81.77 cps in Australian cents. With the stock trading down at $10.20 by mid-morning this implies a price-to-earnings ratio of 12.5x. That certainly doesn't appear demanding considering the quality of the company even after allowing for potentially lower growth rates in the future.
