The DickerData (ASX:DDR) share price reached an all time high of $4.79 last week, as the company announced another quarter of strong revenue growth. What is driving DickerData’s strong revenue performance, and is it sustainable in the longer term?
What does Dicker Data do?
Established in 1978, Dicker Data is a distributor of computer hardware and related products in Australia. It offers technology products from vendors such as HP, Toshiba, ASUS, Lenovo and Microsoft, among others.
Strong Q1 2019 Results
On Wednesday Dicker Data released its results for the first quarter of the 2019 Financial Year. Revenue totalled $386.9m, 21.1% higher than the corresponding quarter last year, while profit before tax reached $13.5m, 46.7% higher than the corresponding quarter last year.
The strong performance of Dicker Data can be attributable to a range of factors including-
- Broad growth – strong revenue across all existing vendor partnerships, and realising value for new vendors
- Improving profit before tax margin – cost as a percentage of sales fell, resulting in the profit before tax margin increasing to 3.5% this quarter
However, DickerData CEO David Dicker also acknowledged that the company’s cost base is likely to increase in the subsequent quarters. This is due to additional capital investments, headcount and productivity measures to support its growing customer and vendor portfolios.
Should I invest in Dicker Data?
In its May company announcement DickerData reiterated the full year pre-tax profit guidance of $51.4m for financial 2019. With the company historically paying out a substantial majority of its profit as dividends each year, 2019 looks to be another good year for dividend yield. But should I actually invest?
The Strawman consensus valuation currently sees the stock as overvalued. Click the button below to see what the Strawman community is saying about this stock …
Disclaimer– The author may hold positions in the stocks mentioned in this publication, at the time of writing. The information contained in the publication and the links shared are general in nature and does not take into account your personal situation. You should consider whether the information is appropriate to your needs, and where appropriate, seek professional advice from a financial adviser. For errors that warrant correction please contact the editor at [email protected].
Strawman is Australia’s premier online investment club. Join for free to access independent & actionable recommendations from proven private investors.
© 2019 Strawman Pty Ltd. All rights reserved.
ACN: 610 908 211 | Australian Financial Services Licence (AFSL): 501223