Cantor Fitzgerald believes there is “still plenty of upside” to Newmark Security (LON:NWT) after it released full year figures this week.
The broker said the results, which saw Newmark more than double its pre-tax profit to £2.25mln from £906,000 previously, were “exceptionally good.”
However, the company cautioned its profits in the current year will be lower as it invests in new products and markets.
The broker said: “Newmark’s profit progression is never smooth due to the project-related nature of much of the business.”
Much of what Newmark, a niche provider of specialised security equipment to the major construction and refurbishment project industry, does is project based, it explained.
Last year, it benefitted from several large contracts and Cantor expects profits to decline by around 40% this year as extra investment is made, before recovering to the levels seen in the last 12 months.
Newmark also reported sales growth of 19% to nearly £23mln as it hiked its dividend up by a third.
“The company has a proven track record of consistent growth and has a conservative but progressive dividend policy” Cantor said.
Shares fell 30% in the aftermath of the results but were 11.5% higher today. It must also be remembered they are up 77% in the year to date.
Cantor points out that the stock continues to trade at a substantial discount to its peer group, despite outperforming the market by 66% this year.