The Nextdc Ltd (ASX: NXT) share price has gained about 88 per cent over the past year and this tech company looks like it's on track to continue providing solid returns.
Nextdc, which provides data centre outsourcing solutions, connectivity services and infrastructure management software, has been growing steadily over the past five years and entered profit making territory two years ago.
In financial year (FY) 2017 Nextdc reported a profit of about $23 million, significantly up on the $1.8 million profit the company reported for FY 2016.
In the three years before FY 2016 Nextdc had been reporting losses ranging from $3.5 million to $19.9 million.
But now the company looks to have gained momentum which it should be able to build upon in 2018.
The company also announced that revenue for FY 2017 increased by 33 per cent to $123.6 million, with the bulk of revenue, or $117.6 million, coming from Nextdc's data centre services division.
Nextdc, which claims to be Australia's largest data centre provider, now has 8 data centres in 5 cities and its gradual expansion appears to be producing positive results.
In FY 2013 the company's data centre services revenue was sitting at just $9 million but since then the division has been consistently increasing that figure by more than $20 million a year for the past five years to arrive at the latest result stated above.
Nextdc is looking like it's in a good position, with more than $350 million in cash and term deposits plus an increase in its senior secured debt facilities from $100 million to $300 million which it said remained undrawn at the time of publication of results.
The company's financial standing and optimism about its future is reflected in its share price of $5.66, with stock in the company changing hands for about 67x trailing earnings.
As such, Nextdc may not represent the best value when stacked against other companies which have a hand in the cloud data space, such as Telstra Corporation Ltd (ASX:TLS) and Melbourne IT Limited (ASX: MLB).
But Nextdc is unique in that it is highly specialised, has a commanding position in an expanding sector and looks poised for growth.
All this means that it looks like a good time to buy Nextdc.
