What: Information technology services provider RXP Services Ltd (ASX: RXP) reported its results last week and despite reporting solid levels of growth the share price has failed to respond positively, arguably leaving the stock attractively priced.
So What: RXP experienced growth across all key metrics, here are the highlights:
- Revenue jumped 41.5% to $78.9 million
- Profit before tax grew 12.4% to $10.4 million
- Net profit after tax (NPAT) increased 13.2% to $7.4 million
- Earnings per share slipped from 5.6 cents per share (cps) to 5.4 cps
- No debt and cash on hand of $12.1 million
- Final dividend of 1.25 cps declared (this is the first dividend paid by RXP since it listed in December 2011)
Now What: RXP noted that the group experienced strong momentum in the second half after a slow first half – second half growth was up over 26% on the previous corresponding half at both the revenue and profit line. This momentum is expected to continue in the current financial year with guidance for "continued revenue and earnings growth in FY16, with current forecasts indicating revenue in excess of $105 million."
After a tough few years for much of this sector, the current reporting season has shown that business activity could be beginning to experience an uptick. The share price of SMS Management & Technology Limited (ASX: SMX) has gained 30% in the past month; meanwhile the share price of UXC Limited (ASX: UXC) has jumped nearly 34%.
Amongst the listed IT services companies there are likely to be some firms that are also benefitting from this apparent uptick in business activity, but whose share prices are yet to re-rate. Given RXP's share price is up just 2% in the past month it could be one of those opportunities.
