Electrical goods distributer Electrocomponents (ECM) enjoys a 3.3% hike in its share price to 752.2p after posting another quarter of strong growth.
Shares flagged the company’s prospects earlier this year and the revenue numbers for both its fourth quarter to March and first quarter to June justify our faith in the company.
Where’s the growth coming from?
For the company’s first quarter, the Americas was the biggest driver at 13%, not bad considering its comparator in the previous quarter was tough at 10%. Electrocomponents says this was driven by healthy market conditions and market share gains.
Europe grew at the same rate it had in the previous quarter at 9% and even though Asia took its foot off the gas it still managed growth of 10% compared to 15% the prior quarter.
Similar to last financial year, growth is attributable to new customer wins while its own brand products division RS Pro grew 11% like for like during the first quarter, slightly ahead of the pace of digital revenue growth which was 9% up for the quarter.
Investment bank UBS has increase its adjusted pre-tax profit forecast by 3% to £209.9m for the year to March 2019, and lifted the following year’s forecast by 4.5% to £241.6m.
Broker Liberum has raised its target price to 780p and says ‘given the tough comps we see this performance as extremely encouraging and suggest the group continues to gain market share’.
Electrocomponents’ first acquisition in two decades also seems to be bedding in well with its purchase of ISEA ‘trading in line with expectations and feedback from clients, suppliers and employees has been positive’.
The group as a whole ships about 50,000 electronic products to customers every day.