There aren’t many shares that I’d be comfortable buying and tucking away for decades, but Computacenter (LSE: CCC) is one of them. Are you looking for consistent returns from a company with a decent track record? Let me explain why this share might fit the bill.
The FTSE 250 IT infrastructure and services provider has an impressive record of generally rising revenue and adjusted earnings backed by robust incoming operating cash flow. The directors have channelled the firm’s success into the dividend, which is up more than 50% over the past six years.
More great performance
But that’s not all. The share price has risen around 55% over five years, even after falling back in the general market weakness since last summer. It now sits about 27% down from its peak, and I think this could be an attractive entry point.
Today’s full-year results demonstrate the kind of performance we’ve come to expect from the firm. In 2018, revenue rose almost 15% compared to the year before, net cash from operations increased nearly 9%, adjusted pre-tax profit lifted just over 11% and adjusted diluted earnings per share moved more than 16% higher. The directors expressed their ongoing confidence in the outlook by pushing up the total dividend for the year by a little over 16%. There’s no doubt about it, the numbers are good.
If you hold the shares, you’ll get exposure to Computacenter’s international operations. Around 46% of adjusted operating profit came from Germany in the period, 40% from the UK, 5% from France and the rest from a number of countries including the USA. The company is expanding geographically with a combination of organic growth and targeted acquisitions.
Exciting expansion in the US
There’s something of a celebratory tone to today’s report because revenue exceeded £4bn for the first time during 2018 having increased by £559m in the past 12 months alone. Some of the advance came from the acquisition of a company called FusionStorm in September, which contributed £3m of adjusted operating profit in the last three months of the year. The acquired company provides IT solutions in the USA and Computacenter is integrating it with the existing US business.
The move increased the employee headcount in the Americas region by around 50%. The directors explained in the September acquisition announcement that Computacenter can now offer a full range of services in the US similar to the firm’s offerings in Europe. Although fledgeling, I think the US business has tremendous potential for further expansion and could be a decent driver of profit growth in the years to come.
Maybe the company can replicate in the US the rip-roaring success it is enjoying in Germany, where revenue grew another 8.3% in 2018 driving a 14.5% surge in adjusted operating profit. Yet results were impressive in the UK and France too. Computacenter seems to be firing on all cylinders – the outlook is bullish, and I reckon it could sit well in my portfolio for years to come.
