Capita share price: Company sees significant underlying growth in 2014
Capita Plc (LON:CPI) today published an upbeat report for 2014, which revealed that the company had seen significant growth in both underlying revenue and pre-tax profit. Adding to the positives, the company highlighted that it had secured £1.1 billion worth of contracts since the start of the year and expressed optimism that it would achieve low double-digit revenue growth in 2015. Also, the company’s bid pipeline has increased to £5.1 billion, from £4.1 billion in November.
Capita’s chief executive officer Andy Parker commented on the results: “2014 was a year of excellent financial performance, with 9% organic revenue growth, sustained high returns and levels of cash generation, and an active year for acquisitions.” He added: “We have good visibility of strong revenue growth in 2015, which will be driven by the conversion of our bid pipeline, acquisitions and the full benefit from last year’s contract wins and acquisitions.”
Capita’s full-year underlying revenue rose 14 percent year-on-year to £4.37 billion, while its underlying pre-tax profit increased 13 percent to £535.7 million. The upbeat financial performance prompted the company to raise its total dividend for the year by 10 percent to 29.2p a share.
Reuters quoted Stephen Rawlinson, an analyst at Whitman Howard, who said that he was “enthusiastic” about the company’s return to “the high-quality earnings we saw in 2002-2010”. Rawlinson, who has a “buy” rating on Capita’s stock, added: “Revenue rose by 14 percent in 2014, of which 9 percent was organic, always an important number at Capita … the pipeline is now back at 5.1 billion which should also help with sentiment.”
Rawlinson’s prediction appeared to be on target in the first hour or so after the opening bell in London, when Capita shares jumped to a five-month high of £12.26. But the stock has reversed course since then, leading to some significant losses.
In today’s trading, Capita shares were down 2.3 percent at 1,168.50p, as of 14.43 UTC. The company’s stock has risen 7.6 percent since the start of the year.
According to the Financial Times, the 17 analysts offering 12 month price targets for Capita have a median target of 1,180p, with a high estimate of 1,365p and a low estimate of 950.00p. As of Feb 14, 2015, the consensus forecast amongst 31 polled investment analysts covering Capita has it that the company will outperform the market. This consensus estimate has been maintained since 9 June, 2014, when the sentiment of investment analysts improved from “hold”.
As of 15:54 GMT, Thursday, 26 February, Capita PLC share price is 1,174.50p.
