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Concurrent Technologies – decent results but little growth over the past 5 years
Posted 01/09/11
There were decent interim results for the six months to 30 June 2011 from the specialist in the design and manufacture of high-end embedded computer products but it’s hardly a high growth play to excite investors!
For the 6 months profit before tax was £1,132,234 (H1 2010: £1,004,649) on sales of £6,870,601 (H1 2010: £5,412,725), with earnings per share for the period 1.45p (H1 2010: 1.08p). Gross margins were marginally lower at 51.7% vs. 53.7% as a result of the weaker US$ in the period.The interim dividend was lifted 9% to 0.60 pence per share with the full year dividend forecast of 1.60p equating to a yield of c3.6%
The Group remained cash rich with net cash and cash equivalents £5.4m (H1 2010: £4.6m) at the half year end.
Management commented that trading conditions in the defence sector remain good.
Concurrent Technologies specialises in the manufacture of ruggedized and non-ruggedized single board computers. Working with the latest Intel® Core™ chips, a broad range of current BUS technologies and various PCB design, the company develops SBC’s capable of enduring extremes of temperature and stress. They also develop modules for the telecommunications industry using accepted industry standards, such as AMC. – plenty of 3 letter acronyms in there to impress!
The company was established in 1985, to develop a wide range of SBCs using Intel® technology. With their HQ in Colchester, they also have operations in Woburn, just north of Boston, USA and additional facilities in Bangalore, India and China. The company also has partnerships with several companies which assist in developing and producing various cards and components for Concurrent.
While the company has consistently generated positive earnings over the past 5 years there doesn’t appear to have been much real growth in earnings. Revenue in 2006 was £12.51m and has remained broadly the same to 2010 when it had grown to £12.6m. Over the same period earnings per share has grown from 2.41p in 2006 to 3.10p in 2010 with forecasts for basic earnings per share of 3.6p per share for 2011 and 3.8p for 2012- hardly meteoric growth!
There has been the added bonus of a consistent dividend, however, this hardly compensates for the added risk in this micro-cap. By comparison giant peer BAE Systems that is viewed by many as a boring low growth story has grown earnings per share from 16.3p in 2006 to 41p in 2007 and offers a current dividend yield of close to 7%.
In conclusion while Concurrent has presented excellent results and remains cash rich there really hasn’t been much to encourage small cap investors. Surely the time has come to put the growing cash pile to better use and drive those earnings upward.
This entry was posted 8 months, 3 weeks ago.
