Maintel Holdings News | The Twelfth Magpie

2 top tech stocks I’d buy in March

Rupert Hargreaves — Mon, 19 Mar 2018 10:00:37 +0000

You might not have heard of small-cap tech stock Maintel Holdings (LSE: MAI) before, but that does not mean you should overlook this fast-growing business.

Built around customers

Maintel is a cloud and managed services company, which focuses on the provision of digital communications for clients. In plain English, the firm provides cloud-based conference calling software as well as business management software to help streamline companies’ customer communication operations, such as call centres.

This is just a basic overview of Maintel’s operations. The group also has several partnerships with other cloud-based service providers such as Cisco, Talk Talk Business, BT Wholesale, SSE Telecom and Microsoft, which allows it to build the best package of services around customers’ needs.

And it certainly looks as if customers are pleased with the offering. Indeed, today the firm reported that its revenue jumped 23% to £133m for the year to 31 December and basic earnings per share leapt 36% to 21.7p.

Since 2012, revenues have expanded nearly 400%, from £28m to £133m as reported today. Unfortunately, the company has failed to convert this sales rise into bottom-line growth. Earnings per share have hardly budged since 2012 as the firm is having trouble building a sustainable competitive advantage to support profit margins.

For example, last year management had hoped that a contraction in margins reported during the first half would be reversed by the end of the year thanks to new customer agreements and synergies from acquisitions. However, it was clear this was not going to be the case. Lower-than-anticipated revenue from two large legacy contracts and the greater-than-expected impact of contract delays prompted management to issue a profit warning at the beginning of December.

Still, despite Maintel’s problems, there’s no denying that the company is growing rapidly, and right now, it looks as if the market is giving no credit to this growth. Specifically, the shares are currently trading at a forward P/E of 9.6 and support a dividend yield of 4.6%. The payout is covered twice by adjusted earnings per share and today management has announced a 10% increase in the full-year distribution

Growth at a reasonable price

Another tech stock that’s recently caught my eye is IMImobile (LSE: IMO). Like Maintel, this company provides cloud communications software for businesses. However, unlike Maintel, IMImobile has been able to transfer sales growth to the bottom line. Since 2012, net profit has grown at a rate of around 20% per annum as revenue has expanded at a compound annual rate of 15%.

City analysts are expecting IMI’s profit growth to continue on its current trajectory. Analysts have pencilled in earnings per share growth of 51% for 2018 followed by an increase of 22% for 2019. These projections suggest that the shares offer growth at a reasonable price trading at a PEG ratio of 0.5 for 2018.

As well as this growth, IMI also supports a cash-rich balance sheet with net cash of £14m at the end of fiscal 2017. Maintel has a net debt position of £28m. With this being the case, I’m inclined to believe that IMI is a better buy than Maintel if you’re looking for a fast-growing small-cap tech stock trading at an attractive valuation.

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Rupert Hargreaves owns no share mentioned. Teresa Kersten is an employee of LinkedIn and is a member of The Motley Fool’s board of directors. LinkedIn is owned by Microsoft. The Motley Fool UK has recommended Cisco Systems. 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.

Two high-flying growth stocks trading at bargain valuations

Edward Sheldon, CFA — Fri, 05 May 2017 07:14:37 +0000

It’s no secret that fast-growing companies usually trade at high valuations. Just look at ASOS, which currently trades on an eye-watering forward P/E ratio of 80. However for those willing to do the research, it’s possible to discover companies enjoying strong growth yet trading at bargain valuations. Here’s a look at two such companies.

Maintel Holdings

Communications specialist Maintel Holdings (LSE: MAI) is growing at a phenomenal rate. It specialises in the sale and installation of telecommunications systems and services to the enterprise business sector, delivering complete end-to-end solutions delivered on-premises or via the cloud.

Through a combination of organic growth, and key acquisitions, Maintel has enjoyed revenue growth of a stunning 49% per year over the last five years, and earnings have increased from 23p per share to 47p per share in this time. And with earnings set to soar 89% in FY2017 to 89p per share according to analysts’ estimates, the stock trades on a forward looking P/E ratio of just 10.4 at present, an undemanding multiple given the company’s growth history.

Recent results were impressive, with revenue surging 114% after the “transformational” acquisition of Azzuri, although investors should note that organic revenue growth was only 1%. Adjusted profit before tax rose 52% and the dividend was increased 5%, taking the yield to 3.3% at the current share price.

Bears will point out that debt has increased significantly after the Azzuri acquisition, with the debt-to-equity ratio now standing at 109%. However management recently stated that debt of 1.6 times adjusted EBITDA is “comfortably ahead of board expectations.”

CEO Eddie Buxton was upbeat about the company’s prospects for 2017 in March, stating that “the combination of an enlarged customer base and the broader technological platform positions Maintel well for an exciting growth trajectory in the cloud environment and we look forward to 2017 with cautious optimism.”

As a result, with the company’s market cap still a small £131m, it appears that Maintel offers value for a company well-placed to continue growing.

Cambria Automobiles

Another smaller company that looks to offer compelling value right now is Cambria Automobiles (LSE: CAMB), the owner of 50 car dealer franchises across the UK. Its business strategy is based around acquiring underperforming dealers, and management has a strong track record of improving these dealers’ profitability. The company also enjoys multiple revenue streams, as not only does it sell cars, but it also services them.

Cambria has enjoyed robust growth in recent years, with revenue and earnings growing 12% and 25% per year over the last five years. The company also sports a high return on equity of around 24%. However, despite these impressive numbers, it trades cheaply on a forward P/E ratio of a low 8.1, and an enterprise value-to-sales ratio of just 0.11.

The shares spent most of 2016 trending down, which is not surprising given the Brexit-related uncertainty surrounding UK-focused companies. But more recently, the stock has formed a series of ‘higher lows’ and appears to be breaking out of the downtrend.

A trading update for the five months to the end of February was positive, with management stating that trading in the period had been “substantially ahead” of a year before. With the stock up 12% year-to-date, perhaps investors are finally catching on to the fact that Cambria is a fast-growing company trading at a dirt-cheap valuation.

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Edward Sheldon has no position in any shares mentioned. The Motley Fool UK owns shares of and has recommended ASOS. The Motley Fool UK owns shares of Cambria Automobiles. 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.

2 growth shares that deserve investors’ attention right now

Kevin Godbold — Mon, 20 Mar 2017 15:27:46 +0000

Communications specialist Maintel Holdings (LSE: MAI) delivered a decent set of full-year results today that were dominated by the contribution from the firm’s acquisition of Azzuri, which completed during May.

Integration going well

Revenue expanded by 114% compared to the 2015 outcome, pre-tax profit ballooned by 52%, earnings per share went up 29% and operating cash flow improved around 56%. The acquisition caused net debt to surge by around 520%, to just over £20m, which is just over six-and-a-half times the level of operating profit achieved during 2016. This raises the stakes, but the directors underlined their confidence in the enlarged firm’s prospects by pushing up the full-year dividend by 5%.

Integrating Azzurri’s business with existing operations is going well and is ahead of the directors’ expectations, which provides some evidence that the gamble may be paying off. Maintel has its sights set on rapid growth in the cloud environment and recent contract wins are encouraging.

Growth on track

Chief executive Eddie Buxton reckons organic growth has been robust, too, with a strong recovery in the second half of 2016. Looking ahead, Maintel expects further synergies to materialise within the enlarged business that should drive cash inflow and debt-reduction. The company aims to grow both organically and by keeping an ear to the ground for further potential acquisitions.

Today’s share price of 1,037p puts the firm on a forward price-to-earning (P/E) ratio of just over 12 for 2017, and the forward dividend yield runs at 3.3 %. City analysts following the firm expect forward earnings to cover the payout around 2.5 times, which doesn’t strike me as outrageous. I don’t think valuation seems likely to impede the upward momentum of the shares at the moment.

Impressive figures

Data-focused marketing solutions provider Taptica International (LSE: TAP) delivered some impressive full-year results today. Revenue shot up by 66% compared to the year before, net cash from operations improved by 227% and cash on the balance sheet swelled 126% or so to sit at $20.3m. The directors of the Israel-based company pushed the full-year dividend up by a whopping 29%, which suggests they are confident about the firm’s forward prospects.

One of the difficulties for investors with firms like Taptica, if my experience is typical, is that it’s hard to gain visibility for the firm’s earnings because it’s difficult to see how the firm actually makes its money on a day-to-day basis. The firm tries to help by describing itself as, “a global end-to-end mobile advertising platform for advertising agencies and brands,” but it’s still hard for me to gauge how sales may behave in the future, unlike, say, a pie maker whose operations seem rather less opaque. However, advertising is often a cyclical business so I think it’s safe to assume that Taptica will see volatility in its operations as macroeconomic conditions undulate over time.

Fair-looking valuation

That said, the firm is growing fast right now and doesn’t seem to have an excessive valuation. At a share price of 295p, the forward P/E ratio runs at just under 11 for 2018 and the forward dividend yield is around 1.9%. City analysts following the firm expect forward earnings to cover the payout 4.75 times — a high level that suggests the directors see more room for growth ahead and thus better places to invest the cash than into the dividend.

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Kevin Godbold 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.