Pan-European software reseller Computacenter (CCC) saw its share price storm more than 11% higher on Wednesday to a near 12-month high of £15.17, the biggest riser of any of the hundreds of companies listed on the FTSE All-Share index.
Today’s second quarter trading update may be figure-free but it did tell investors that full year 2019 results will come in ‘materially ahead of current market expectations in both profitability and earnings per share’.
That’s the sort of positive profit warning investors love.
It is the second time this year that the stock has jumped significantly on Computacenter’s surprisingly good trading. Back in April the share price soared nearly 15% on management’s underlying optimism.
Computacenter is normally conservative with how its guides the market so when it talks up its own prospects, investors tend to listen.
A 10%-PLUS PROFITS BEAT?
The word ‘materially’ is important. Companies are encouraged to tell investors when they believe that results will come in more than 10%, either above or below, current market expectations.
Consensus analyst forecasts for 2019 are 79.1p earnings per share, £127.5m pre-tax profit and £4.85bn revenue.
Stifel analyst George O’Connor is leaving his own estimates alone, for now. That’s partly because he was already marginally north of consensus on pre-tax profit, with £128.8m pencilled in. It’s also because O’Connor would rather wait for detailed data that will come alongside half year results, due for publication on 23 August.
DIGITAL TRANSFORMATION
One of the key reasons why analysts and investors have been caught out again is because of underestimating widespread digital transformation and organisations’ increasing willingness to recruit a trusted partner to help manage their IT needs.
Almost no business or organisation is untouched by the internet these days in how they trade, engage and meet customer needs. Computacenter has the experience and expertise to walk clients through this potential minefield.
Computacenter is a running Shares Great Idea from 2 May, pitched at £12.10, which you can read here.
