ASG Group Limited share price falls 7%: Here's why

ASG Group Limited (ASX:ASZ) share price falls 7%

Mike King

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Published August 18, 2015 2:20 pm AEST

ASG Group Limited (ASX: ASZ) has seen its share price drop 7.2% to 96 cents today, before going into a trading halt.

The IT consulting company expects to announce a 'material contract win' before Thursday's market opening. But it was the company's disappointing results that were also announced today that saw the shares sold off.

Here's a quick summary:

Revenues: Up 2.6% to $164.3 million compared to the previous financial year
Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA): Down 8.1% to $20.2 million
Net profit after tax: Up 6.3% to $9.5 million
Earnings per share: Up 6.2% to 4.61 cents
Dividend and yield: Zero. Zip. Nada. None.

As you can clearly see, investors may have been expecting a dividend, although ASG hasn't paid a dividend since October 2012. Growth in earnings of just 6% also appears to be lower than the market expected.

Outlook

ASG says it is targeting revenues of between $180 and $190 million, and already has $160 million of revenue already locked in. An EBITDA margin of 14% should see EBITDA come in at around $26 million – a substantial increase over this year's $20.2 million.

At the current share price of $0.96, ASG is trading on a P/E ratio of 20.8x – not exactly cheap, although growth this financial year appears strong. ASG could be one to watch.

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