FTSE 250 incumbent Future (LSE:FUTR) has seen its share price rally recently. Yesterday it increased handsomely based on excellent full-year results. Should I add shares to my portfolio at current levels? Let’s take a look.
Future is an international media and digital publishing firm. It produces and maintains technology and works with leading brands throughout the world to enhance their presence and reach out to their customer bases. Some of its proprietary technology includes website platforms, email delivery systems, and lead generation tools.
As I write, shares in Future are trading for 3,644p. A year ago they were trading for 1,792p, which is a 103% return! The FTSE 250 index in the same time period has only increased close to 13%. Future shares yesterday jumped 15% due to positive results.
Fantastic results continue
Future’s full-year results announced yesterday were extremely impressive. I am not surprised the share price jumped as a result. Future reported revenue had increased by 79% to £606.8m compared to last year. Operating profit increased 127% to £115.3m too. Cash generated grew by a mammoth 115%. From an operational perspective, organic growth was reported in all key territories, which is a good sign.
The good results prompted Future to declare a dividend of 2.8p per share. This is up from 1.6p last year. Shares that pay a dividend and could make me a passive income are usually an attractive prospect. Especially when they seem to be performing well and growing organically, which Future is if these results are anything to go by.
Future also has an excellent track record of performance and growth. I understand past performance is not a guarantee of the future. I tend to review this as a gauge. Revenue and operating profit have both increased year on year for the past four years.
FTSE 250 stocks have risks
I have two concerns with Future. Firstly, in its full-year results, it was confirmed that Covid-19 boosted the business in terms of growth and performance. Could this mean if the pandemic settles down we may not see such levels of growth once more? In addition to this, I have an issue with the current valuation of Future shares. At current levels it sports a price-to-earnings ratio of 56, which is a bit high for my liking. I could add shares at this level but if any negative news knocked the price down, I could lose out.
Overall I like Future as a company and its growth and results are there for all to see. I would consider buying shares for my portfolio but I think I will wait for them to fall a bit. Performance and growth will continue in my opinion but I want to buy shares a bit cheaper than current levels. There are other FTSE 250 stocks that are performing well that are better priced for my portfolio currently.
Jabran Khan has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.