The Dicker Data Ltd (ASX: DDR) share price traded flat this morning, after the company reported strong profit and revenue growth during its full-year results released yesterday afternoon. Here's what you need to know:
- Revenue rose 10% to $1,185 million
- Net profit after tax (NPAT) rose 25% to $26 million
- Earnings of 16 cents per share, up from 15.5 cents per share previously
- Dividends of 15.5 cents per share, up from 12.5 cents previously
So What?
A respectable performance from Dicker Data, with progress made both on containing costs and growing revenue. Revenues grew primarily from existing vendors, although new vendors were added in both 2016 and 2017. The new vendors also contributed meaningfully to the company's growth:
The company was also recently appointed the distributor for Seagate, Trend Micro, Lenovo (in NZ), Quest, and Microsoft Surface, and these could add meaningfully to revenues again in 2017.
Equally importantly, management was able to keep costs contained during the year, with operating costs falling to 5.6% of sales (5.9% in 2015 – lower is better). Salary expenses fell to 4.5% (4.6% previously) despite the addition of new staff to support new vendors, and other operating expenses fell to 1.1% (1.3% previously).
Unfortunately, gross profit margins also declined to 9.3% (9.6% previously) as a result of a different product mix and greater competition. While this is not ideal, the combination of growing revenues and declining costs is ideal for a company like Dicker Data, and contributed meaningfully to its results.
Now What?
Today, Dicker Data is priced at approximately 15 times last year's earnings, which appears reasonable for a distributor. The company's high payout ratio supports a whopping 6.4% dividend, fully franked.
While I would not like to pay much more than today's prices, Dicker Data has a track record of prudent management and delivering on its promises, and I would consider buying shares at today's prices.
