Investors rarely come across a blue chip stock from ASX listed companies, which is not only making a 52 week high but also recording a best ever price. One such among high quality dividend paying stocks is
Computershare Limited (ASX: CPU)
Computershare Limited (ASX: CPU) reported solid performance in its full-year results for the period that ended on 30 June 2024, highlighting several key growth indicators and positive catalysts for future performance. The company achieved a 2.1% growth in management revenue, reaching $3.3 billion, with management EBIT excluding margin income (MI) up by 20.9% to $310.9 million. Margin income increased by 7.3% to $832.1 million, reflecting strong growth across its operations. Additionally, management EPS grew by 8.9% to 117.6cps, while group return on invested capital (ROIC) reached an impressive 30.2%, up by 753 basis points, underlining the company's efficiency in generating returns. The company also posted a final dividend of 42cps, which is a 5% increase compared to the previous corresponding period, demonstrating its commitment to returning value to shareholders.
Issuer services and employee share plans performed strongly in FY24, contributing to overall performance. A significant aspect of the company’s strategy is its expanding hedge book, which has reached $1.5 billion of locked margin income as of 30 June 2024. This secured margin income constitutes 73% of the total hedged margin income, providing predictable and stable income streams.
Notably, the hedge book is unaffected by interest rate movements, which reduces the risk of market fluctuations impacting financial performance. The company projects $1.1 billion of margin income to be realized over the next five years, reinforcing the stability of its revenue base.
Looking ahead to FY25, Computershare targets management EPS of 126cps, representing a 7.5% growth from FY24. The company anticipates a 15% increase in EBIT excluding margin income, and margin income revenue is projected to be $745 million, with average client balances expected to reach $28.5 billion. This forward-looking strategy positions the company to capitalize on future growth opportunities while maintaining financial stability through its expanding hedge book.
The company's balance sheet remains strong, with a capacity of approximately $2.6 billion, further enhancing its ability to pursue strategic opportunities and deliver long-term value to shareholders.
This improved financial positioning, along with the continued growth of the hedge book, offers enhanced stability and reduces the impact of interest rate fluctuations, making Computershare an attractive investment for those seeking consistent returns and a stable financial outlook.
Computershare Limited is currently trading at its all-time high, signaling the potential beginning of a new leg of upside rally. The company's strong financial performance in FY24, including revenue growth, improved EBIT, and solid margin income, combined with its strategic hedging approach, has built a solid foundation for sustained growth.
Source: Company’s Report
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