DiscoverIE Group plc’s “ability to consistently deliver was once again proven” in last week’s trading update, analysts at broker Panmure Gordon said of the London-listed electronic components company.
Despite currency headwinds and a modest decrease in organic sales, discoverIE reported a 1% year-over-year rise in group sales at constant exchange rates and highlighted a robust recovery in the final quarter, with a 2% rise in organic sales.
The company’s margin progress underpinned its underlying earnings, noted Panmure analysts.
Though they nudged down revenue forecasts “to reflect translational effects from the disposal of a small solar switches business unit”, analysts offset this by increasing their operating margin assumptions.
“The group should enjoy the double benefit of the exit from this low margin unit and the earnings accretive bolt-on acquisitions” made in the last quarter, said Panmure.
“We note the continuing good operating cash flow, where gearing at year-end reduced to 1.5x, which provides ample headroom for more earnings-enhancing bolt-on acquisitions in the near-term.”
DiscoverIE is a buy with a 990p price target against a 698.7p price target, said Panmure.