Yesterday, shares of telecommunications business M2 Group Ltd (ASX: MTU) finished the day sharply lower amid global market jitters.
However, amongst all the 'noise', the owner of Dodo, Primus, Eftel and Commander brands quietly reported a strong set of results to the ASX for its 2015 financial year.
In the year ended 30 June 2015, M2 powered ahead with a number of operational and financial achievements and reinforced my view of its shares being a good buy for the long term.
Here are five reasons to consider an investment in M2 today:
- Revenue is growing. Year-over-year revenue growth was 9%, totalling $1.12 billion.
- Profits per share are growing despite acquisitions. One risk when a company grows profits by acquisition is that shareholders lose out on a per-share basis because of extraneous costs associated with the transactions. However, despite making a number of acquisitions M2 grew earnings per share by a healthy 9%, to 40.5 cents.
- Dividends are growing. As a savvy capital allocator, M2's management and the board know how to spend the company's money to the greatest effect. This was again reflected yesterday with the declaration of a fully franked 17 cents per share dividend taking the full year payout to 32 cents – up 23% on 2014.
- The outlook is very good. In the short run, given the recent acquisition of CallPlus, M2 expect revenue growth of around 25% and profit growth of more than 30%. Longer-term use of telecommunications services locally is also likely to enable the company to continue growing modestly.
- Shares are not expensive. Following recent share price falls, M2 shares don't appear overly expensive. While I wouldn't call them a definitive bargain, if we see any further weakness in price they'll almost certainly move to the top of my buy list.
