The Computershare Limited (ASX: CPU) share price is rising in reaction to its FY19 result release.
Computershare is best known for its share registry services and employee share plans, but also provides mortgage services. It was founded in Melbourne in 1978 and has now become a global business with over 75 million customer records and 12,000 staff.
Computershare’s FY19 Result
Computershare reported that its revenue increased by 4.8% to US$2.41 billion. ‘Management’ EBITDA (click here to learn what EBITDA means) grew by 10.2% in constant currency terms to US$685.9 million and the EBITDA margin improved by 1.3% to 28.4%
Management profit/earnings per share (EPS) rose by 12.8% to 71.46 cents. Statutory EPS jumped by 38.8% to 76.57 cents. Management net profit after tax (NPAT) rose by 12.6% to $US388 million in constant currency terms.
Looking at some of the individual segments, Computershare said that acquired business Equatex outperformed the initial expectations and integration into a single platform is underway.
US Mortgage Services delivered a better performance in the second half and Register Maintenance achieved revenue growth and profit margin improvement.
However, the UK Mortgage Services suffered from the previously-announced delay in migrating loans to the new platform and there was a decline in fixed fee revenue – restructuring is underway here.
Computershare Dividend
Computershare increased its final dividend by 9.5% to AUD$0.23 per share.
This brings the total year dividend to AUD$0.44, which is an increase of 10% from FY18.
Are Computershare Shares A Buy?
Computershare warned that in constant currency terms, FY20 management profit per share (EPS) is expected to be down by around 5%.
This is due to the delay of platform migration benefits of UK mortgage services. If excluding these two factors, FY20 management EPS is forecast to grow by around 5%.
Computershare is a good Aussie business but it seems like growth will be slow going from here, particularly with competition from other financial service businesses like Link Administration Holdings Ltd (ASX: LNK).
I can think of better blue chip investment opportunities, such as the ones in the free report below instead.
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