Data#3 reports today, and has seen growing interest from our contributors in recent months. While the company has seen a few cycles, it has evolved significantly in recent years, with Wilson AM, Novaport and Tamim all now taking a positive view.
Novaport: Transformation in the P&L
Product sales last financial year amounted to $794m (6% compound growth since 2012) while services revenue has grown by 11% to $187m. As the chart below shows, since 2010 services related revenues are over 70% higher, while product sales are up 35% over the same period. (VIEW LINK)
Wilson AM: 6 stocks for FY18
Historically a re-seller of desktop software, Data#3 is transitioning to a cloud-based software business. With cloud-based software providing higher margins, the company’s change in strategic direction is starting to deliver significant revenue growth for the company. Data#3 has considerable free cash flow which ensures the company is well-positioned from a capital management point of view and to make future acquisitions to supplement existing revenue streams: (VIEW LINK)
A beneficiary of a rising currency
Guy Carson of TAMIM made the case that a higher currency could support Data#3, in concert with other structural tailwinds: "Both Data #3 and Dicker Data trade on reasonable multiples, pay good dividends, are currently experiencing strong earnings growth and operate in an industry with structural tailwinds": (VIEW LINK)