Coms plc Surges Into Profit

Coms (LSE: COMS), a leading provider of telecommunications and infrastructure equipment, reported its preliminary annual results for the year ended 31 January 2014 this morning, and they did not disappoint. 

Coms has been closely watched by both the City and private investors alike during the past year, as the company has put itself through somewhat of a transition.

Coms has been working hard to change itself into a leading and profitable telecommunications company. The company has signed a number of game-changing deals during the last year. The company also successfully integrated a number of bolt-on acquisitions. 

So, these results, detailing the company’s progress, were keenly awaited.

Blow out resultsstock exchange

Coms’ management informed the market during May that earnings before interest, taxation, depreciation and amortisation, as well as pretax profit figures would be “significantly” higher than the £750,000 and £45,000, respectively, that it had previously indicated.

Indeed, Coms surprised the market by reporting revenue of £14m and gross profit of £4.8m, up 763% and 411% respectively, from the year ago period.

In addition, Coms reported a profit of £1.2m, compared to a loss of £936,000, reported during the same period last year. Overall, Coms reported basic earnings per share of 0.22p. 

Unfortunately, it would appear that the market is underwhelmed by these results, as at time of writing, Coms’ shares have fallen around 9%. Coms’ sky-high valuation may be the reason for this poor performance, as at present levels, the company trades at a P/E of 28.

Management are upbeat

Still, despite the market’s rather disappointing reaction to this impressive set of results, Coms’ management remains upbeat about the future. 

Within the results announcement, CEO Dave Breith, who has only been at the helm for the past 12 months, revealed that:  

“…Having reviewed current trading, commercial prospects and with regard to the cost of on-going integration initiatives I am pleased to report that the Board remains confident that the current 2014/15 market estimates for the full year revenue and profit before tax remain valid…”

The relatively new CEO also thanked Coms’ board of directors and shareholders for their support during the past year. 

Current City forecasts expect Coms’ to report pre-tax profit of £2.4 million for 2015, and £5.60 million for 2016. These profit forecasts are expected to translate into earnings per share of 0.25p and 0.58p respectively.

However, based on Coms’ performance this year, it would reasonable to suggest that these forecasts could be revised higher later in the year.

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Rupert does not own any share mentioned within this article.