All 3 of the stocks below have 2 things in common.
One: they are all growth stocks.
Two: I own them.
Growth stocks have had a great time during this long bull market, outpacing the returns of their value stock counterparts. One component of this growth is strong fundamental performance, however another component is the expansion in price-to-earnings (P/E) ratios more broadly.
With market valuations sitting above historical averages, it is not surprising to see increased volatility in the market, let alone for growth stocks. Here are the results which saw these stocks drop during week 3 of reporting season.
Altium Limited (ASX: ALU)
The Altium share price was down 19% last week, after releasing its FY20 interim results on Monday.
The PCB circuit board software provider reported a 19% increase in half year revenue (excluding interest) to US$92.85 million and a 22% increase in earnings before interest, tax, depreciation and amortisation (EBITDA) to US$36.8 million. The company also declared a 25% increase in the interim dividend to 20 Australian cents per share.
Despite another strong result, it appears that the market is concerned over the guidance provided around the coronavirus impact. Altium expects to land at the lower end of its full year guidance range. Despite the current concerns, I believe the company can confidently meet its long-term 2025 target of 100,000 subscribers.
Nearmap Ltd (ASX: NEA)
Shares of Nearmap were down 5% on reporting their FY20 interim results on Wednesday last week. The share price recovered later in the week to close at $1.96 on Friday, before falling again yesterday in the market-wide sell-off.
For the half-year ended 31 December 2019, Nearmap recorded a 31% increase in revenue to $46.3 million, group annualised contract value (ACV) of $96.6 million, and a 843% increase in net loss after tax to $18.6 million.
The reason for the significantly increased loss is the company's investment strategy and resulting increase in the operating cost base. The loss was further worsened by increased amortisation. The investments the company is making now should result in future growth.
Between $102 million and $110 million is the company's expected FY20 group ACV portfolio.
EML Payments Limited (ASX: EML)
The EML share price was down 19% last week after the fintech released its FY20 interim results on Wednesday.
For the half-year, EML reported a 60% increase in gross debit volume (GDV) to $6.62 billion, a 25% increase in revenue to $59.2 million, and a 42% increase in EBITDA to $19.7 million. Net profit after tax and amortisation was $16 million, up 70%.
EML is guiding for EBITDA growth of 36–43%. The company also narrowed its revenue guidance, increasing the bottom of the range and trimming the top of the range to sit at $120 million and $129 million, respectively. The previous range was $116–$132 million.
Although the market wasn't thrilled with these companies' results and guidance, they are all showing strong growth, which could make them long-term winners in my view.
