Cerillion combines growth and income

Tech business is putting its strong cash generation to shareholders’ benefit
Thursday 24 Nov 2016 Author: Steven Frazer

Telecoms billing and customer relationship management (CRM) software supplier Cerillion (CER:AIM) looks set to pay roughly 60% of earnings to shareholders through dividends when it reports full year results (28 November). This makes the company an interesting growth and income option for prospective investors.

Analyst Peter McNally at broker Shore Capital expects the £36m business to announce a 3.9p per share payout on rough 7.55p earnings per share (EPS). Revenue and earnings before interest, tax, depreciation and amortisation (EBITDA) should come in up 6% and 8% to £14.8m and £3.1m respectively, for an impressive 21% EBITDA margin.

It will be interesting to see if the company is capable of incrementally lifting the implied profitability rate as well as driving the top line. What will help with the latter, and maybe the former, is new business wins such as the $2.4 million contract with an existing customer in the US announced in March, plus a major win in EMEA (Europe, the Middle East and Africa) in July.

The stock has jumped 61% since its 76p IPO on 18 March to 122.5p. It is at an early stage in its client industry upgrade cycle. (SF)

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