Do The Latest Results Make Redde PLC, Playtech PLC And Spirent Communications Plc Top Growth Buys?

Roland Head runs takes a look at the latest numbers from Redde PLC (LON:REDD), Playtech PLC (LON:PTEC) and Spirent Communications Plc (LON:SPT).

| More on:

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

When investing, your capital is at risk. The value of your investments can go down as well as up and you may get back less than you put in.

Read More

The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of personal advice. Investments in a currency other than sterling are exposed to currency exchange risk. Currency exchange rates are constantly changing, which may affect the value of the investment in sterling terms. You could lose money in sterling even if the stock price rises in the currency of origin. Stocks listed on overseas exchanges may be subject to additional dealing and exchange rate charges, and may have other tax implications, and may not provide the same, or any, regulatory protection as in the UK.

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More.

Are mid-cap growth favourites Redde (LSE: REDD), Spirent Communications (LSE: SPT) and Playtech (LSE: PTEC) a buy after today’s results?

Redde

Redde appears to be a good example of how an accident management and legal services company should be run. There are no Quindell-style concerns here, at least not if today’s interim results are anything to go by.

Sales rose by 35% to £165.2m during the first half, while adjusted pre-tax profit rose by 51% to £17.3m. Better still was news that net cash flow from operating activities rose by 15% to £18.6m, providing cash backing for the firm’s profits.

Today’s results reveal that adjusted earnings per share rose by 13.7% to 4.89p during the first half. This suggests to me that Redde could beat current full-year forecasts for earnings of 8.9p per share.

Even though the stock now trades on a demanding 21 times forecast earnings, Redde’s income appeal also remains strong.

The interim dividend was increased by 12.5% to 4.5p in today’s results. If the final payout rises by the same amount, then Redde will pay a dividend of 9.3p this year, giving a prospective yield of 4.9%.

Spirent Communications

Shares in mobile network testing specialist Spirent rose by 6% this morning after the firm issued a solid set of full-year results. After a poor first half in 2015 — which triggered August’s profit warning — trading appears to have improved during the second half of the year.

Spirent reported adjusted earnings of $0.05 per share, beating forecasts of $0.04 per share. Last year’s dividend payment of 3.89 cents per share was left unchanged and net cash rose to $102m, from $99.8m at the end of 2014.

In today’s results, Spirent confirmed that it expects 2016 results to be in line with expectations. If so, earnings per share could rise to six cents per share this year, giving a forecast P/E of 19. The dividend is likely to remain flat once more, leaving the shares on a 3.4% yield.

Is Spirent a buy? The stock isn’t cheap, but Spirent generates plenty of cash, has no debt and pays an attractive yield. I believe the shares could be a decent growth buy.

Playtech

Online gaming software specialist Playtech has been a more profitable investment than many of its customers over the last few years. Today’s results suggest this trend may continue.

Full-year revenue rose by 38% to €630.1m, while adjusted net profit rose by 8% to €205.9m. Earnings per share were 3% higher at €0.675, in line with expectations. The full-year dividend was increased by 8% to €0.285, giving a yield of 2.7%.

Playtech said that profit growth lagged revenues because of £/€ exchange rate effects and the new UK point-of-consumption tax on gambling machines. Earnings per share growth of around 10% is expected this year, but I think the group’s real appeal lies in its €857.9m net cash balance.

Playtech said today that discussions are ongoing for a number of potential acquisitions. The firm said that if these aren’t successful, then it may return some of its cash to shareholders.

Playtech shares currently trade on a fairly undemanding 14 times 2016 forecast earnings. I suspect they could be a profitable buy at today’s prices.

Should you invest, the value of your investment may rise or fall and your capital is at risk. Before investing, your individual circumstances should be assessed. Consider taking independent financial advice.

Roland Head has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

More on Investing Articles

Investing Articles

Could the JD Sports Fashion share price double in the next five years?

The JD Sports Fashion share price has nearly halved in the past five years. Our writer thinks a proven business…

Read more »

Bus waiting in front of the London Stock Exchange on a sunny day.
Investing Articles

If interest rate cuts are coming, I think these UK growth stocks could soar!

Falling interest could be great news for UK growth stocks, especially those that have been under the cosh recently. Paul…

Read more »

Investing Articles

Are these the best stocks to buy on the FTSE right now?

With the UK stock market on the way to hitting new highs, this Fool is considering which are the best…

Read more »

Petrochemical engineer working at night with digital tablet inside oil and gas refinery plant
Investing Articles

Can the Centrica dividend keep on growing?

Christopher Ruane considers some positive factors that might see continued growth in the Centrica dividend -- as well as some…

Read more »

Smiling family of four enjoying breakfast at sunrise while camping
Investing Articles

How I’d turn my £12,000 of savings into passive income of £1,275 a month

This Fool is considering a strategy that he believes can help him achieve a stable passive income stream with a…

Read more »

Person holding magnifying glass over important document, reading the small print
Investing Articles

2 top FTSE 250 investment trusts trading at attractive discounts!

This pair of discounted FTSE 250 trusts appear to be on sale right now. Here's why I'd scoop up their…

Read more »

Smiling young man sitting in cafe and checking messages, with his laptop in front of him.
Investing Articles

3 things that could push the Lloyds share price to 60p and beyond

The Lloyds share price has broken through 50p. Next step 60p? And then what? Here are some thoughts on what…

Read more »

Young female business analyst looking at a graph chart while working from home
Investing Articles

£1,000 in Rolls-Royce shares a year ago would be worth this much now

Rolls-Royce shares have posted one of the best stock market gains of the past 12 months. But what might the…

Read more »