While Computacenter PLC (LSE:CCC) shares fell sharply on the back of its full-year results cash, analysts had mostly good things to say about the IT reseller's results and the outlook for the rest of 2024.
The results are slightly better than expected with strong free cash flow, said Peter McNally at Stifel, "however, the company is still considering options of what to do with its excess cash".
Panmure Gordon analyst Harvey Robinson said Computacenter has a "strong track record of returning cash mainly by special dividends".
The shares are the "cheapest" of the UK value-added resellers, he said, with Panmure's share price target being 3,350p.
Computacenter's shares, having risen over 40% since the start of last year, fell 8% this morning to 2,700p.
Stifel's target is 3,300p, with McNally saying a slight discount is made to global peers given Computacenter's lower margins.
He noted that today's new news is that revenue was up 6.9% to £6.92 billion, which was shy of consensus of £7.27 billion.
"More importantly", he said, gross profit is up 9.8% to £1.044 billion, slightly better than consensus of £1.037 billion, and adjusted profit before tax is slightly ahead of consensus at £278 million versus £276.4 million.
As previously announced, cash finished strongly around £450 million, primarily from the unwinding of inventories.
The final dividend of 70p, up 3.1% year on year but short of a consensus of 74p.
"Given the strength of our balance sheet we continue to evaluate a number of capital allocation options," the company said.
"This opens the door to both M&A and capital returns, which have both been used to create shareholder value in the past," said Jefferies analyst Charles Brennan.
He also noted that the company has been through the legal process of increasing distributable reserves, which now stand at £474 million "and provide strategic optionality".
The FTSE 250 company's outlook pointed to a year of continued growth, although, as flagged in January, the year will be weighted to the second half.
Jefferies increased its target price to 3,900p from 3,300p.