Europe’s leading provider of IT infrastructure services Computacenter (LSE: CCC) is certainly a true technology growth company with earnings growth every year for the last nine years, driven by a steady sales revenue rise. Shareholders will have been overjoyed with the shares’ outperformance, with the price multiplying tenfold since hitting lows of 68p in 2008.
Computacenter’s revenue rose 2% to £735m in the three months to the end of September and it said Germany outperformed both the UK and France with an 8% revenue rise to £325m, driven by a healthy 22% improvement in its Services business.
It wasn’t all good news. French revenues fell 3% to £83m, dragged down by a 5% dip in its Supply Chain business. The UK also underperformed with a 3% revenue decline to £314m, let down by a 10% slump in its Services business. On a more positive note, there was a return to growth in the UK Supply Chain business.
Ok, these results aren’t exactly inspiring so why am I so confident? All the signs are good. For a start, last month the company said its net funds were up £29m to £96.7m compared to a year ago and it expects to have a record level of funds by year-end. And although it admitted “much remains to be done” in Q4, it also said “prospects for 2017 and beyond, particularly driven by the increased adoption of the digital workplace, are encouraging across all our geographies.”
While much of its Q3 strength was due to a currency-related boost from the weak pound, the renewed Supply Chain growth was encouraging. And that dip in Services was as much about a particularly strong 2015 as a weak 2016. It also seems to be getting to grips with reshaping its French business and positioning it for future growth.
And of course, importantly, Computacenter has been a reliable payer of dividends over the years, with management increasing the payout year after year without fail. Consensus estimates suggest a further dividend improvement to 22.53p per share for 2016, giving a solid yield of 3.1%. The group’s share price has more-than-doubled over the last five years. But while it’s down from its January high of 879p to Friday’s 727p close, I see no reason why this doubling can’t happen again if it continues its current progress.
Another mid-cap firm enjoying good growth over the last few years is the UK’s largest engineering consultancy WS Atkins (LSE: ATK). Commonly known as just Atkins, the firm is one of the world’s most respected design, engineering and project management consultancies, with a multitude of high-profile projects worldwide helping to bring in sales revenue in excess of £1.86bn last year.
The Epsom-based firm has an excellent track record with revenues in an upward curve since the start of the millennium, and uninterrupted dividend growth since 2003. The City expects revenues to exceed £2bn for the first time this year, and rise further to £2.16bn by the end of fiscal 2018. And although Atkin’s shares are trading at all-time highs, I still see good value at 14 times earnings for the current financial year, given the bright outlook.
Atkins’ share price has more-than-trebled since 2011, but its current strength suggests this feat could well be repeated over the long term. It has certainly climbed in just the last few months from 1,518p in early August to Friday’s close 1,705p close.
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Bilaal Mohamed 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.