Castleton Technology (LSE: CTP) edged higher in Tuesday trading following the result of positive full-year financials. The stock was last 1% higher on the day. The software star announced that revenues climbed 12% in the 12 months to March 2017, to £20.3m, a result that powered adjusted earnings 22% higher to £4.4m.
Castleton now boasts more than 750 customers, it advised, more than a third of which take out more than one product or service. The company signed a number of multi-year contracts during the period, including a 10-year deal with Clúid Housing Association in Ireland.
And the business has hit the ground running in the current year, chief executive Dean Dickinson commenting that “the new financial year has started in line with expectations, with a large, engaged customer base, a strong order pipeline and the right structure in place to maximise this significant market opportunity.” Castleton has inked two further multi-year deals since the close of the year, it advised.
Having flipped back into the black last year, City analysts expect further progress and have chalked in a 20% bottom-line advance for the current fiscal year.
And this projection makes Castleton stellar value for money. A forward P/E rating of 14.1 times falls below the widely-considered value benchmark of 15 times or below. A prospective PEG multiple of 0.7 — below a reading of 1 — also suggests the Cambridge firm could be too cheap to miss.
I reckon Castleton is worthy of serious consideration at these prices, particularly as recent acquisitions begin to bed in, and given its encouraging top-line momentum.
McCarthy & Stone (LSE: MCS) is another stock tipped for great things on the earnings front.
Following last year’s modest 3% uptick, the City expects profits to detonate in the years ahead and have chalked in rises of 11% and 22% for the years to August 2017 and 2018 respectively. And it is not difficult to fathom why the number crunchers are so optimistic.
McCarthy & Stone chief executive Clive Fenton said this month: “The market for high-quality retirement housing remains strong notwithstanding any potential uncertainty as a result of the UK general election outcome.” He added that “the underlying housing market continues to be supported by low interest rates, good mortgage availability and low levels of unemployment.”
As a result, McCarthy & Stone affirmed its target of building and selling 3,000 units each year by the end of the decade.
While the business has seen sales slow more recently following the Conservatives’ ballot box disaster in June, the long-term outlook remains robust as Britain’s ageing population drives demand for retirement properties. And I reckon the prospect of any near-term turbulence is more than baked-in at current share prices.
Current forecasts leave McCarthy & Stone dealing on a mega-low forward P/E ratio of 11.1 times. And a PEG ratio bang on the bargain watermark of 1 times underlines its corking value relative to its projected earnings momentum.
Meanwhile, the firm’s brilliant bottom-line outlook, combined with its exceptional cash-generative qualities, is expected to keep launching dividends skywards. The 4.5p reward of fiscal 2016 is predicted to jog to 5.2p in 2017 and to 6.1p in 2018, driving a yield of 3% in the current period to 3.6% the next year.
I reckon McCarthy & Stone remains a compelling pick for long-term investors.
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Royston Wild has no position in any shares mentioned. The Motley Fool UK 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.