Dicker Data share price surges higher after revealing strong first half profit growth

151
growth shares to buy The Dicker Data Ltd (ASX: DDR) share price has been a standout performer on the ASX on Thursday. In morning trade the shares of the wholesale distributor of computer software and hardware are up over 8% to $7.59.

Why is the Dicker Data share price storming higher?

Investors have been fighting to get hold of Dicker Data’s shares after the release of a first half market update. According to the release, Dicker Data’s strong performance continued in the second quarter and led to solid sales and profit growth during the first half. The company has recorded over $1 billion of unaudited revenue during the half, which represents an 18.3% increase over the prior corresponding period. Almost a quarter of this revenue was generated in the final month of the half. Dicker Data delivered record revenue for June of $224 million. Things were even better on the bottom line during the half. The widening of its margins led to its unaudited net profit before tax coming in at approximately $40 million for the six months. This represents a 25% jump on its profit before tax during the first half of FY 2019.

What has driven this strong half?

Today’s update was short on detail, but it is likely that the same drivers of its strong first quarter carried over into the second quarter. In the first quarter, management advised that strong demand for remote working solutions was a key driver of its sales growth. Management commented: “With many organisations enabling their workforces to work remotely we have seen a surge in demand for remote working solutions across both our hardware and software portfolios, highlighting IT distribution’s role as an essential component for business continuity.” The increased sales led to operating cost leverage being achieved, which was also supported by savings in finance costs as a result of the lower interest rate environment.

Dividend.

No update was given in relation to its dividend plans. This appears to indicate that it continues to expect to pay an interim fully franked 7.5 cents per share dividend for the first half. After which, management has guided to a full year dividend of 35.5 cents per share fully franked. This represents a 31.5% increase on FY 2019’s dividend. The post Dicker Data share price surges higher after revealing strong first half profit growth appeared first on Motley Fool Australia.

Where to invest $1,000 right now

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for more than eight years has provided thousands of paying members with stock picks that have doubled, tripled or even more.* Scott just revealed what he believes are the five best ASX stocks for investors to buy right now. These stocks are trading at dirt-cheap prices and Scott thinks they are great buys right now. *Returns as of June 30th
More reading Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips. The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020
Contributors to this article may own shares in some of the companies mentioned in this article. The Capital Club has a thorough disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
James Mickleboro
James Mickleboro studied economics in the United Kingdom before coming to Australia and landing a job at a fund manager. He is part of the CFA Institute's Chartered Financial Analyst program. He loves researching and writing about Australian equities.