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Business Overview
Micro Focus is engaged in delivering and supporting software solutions. It is a pure-play software firm in the world, focused on developing, selling and supporting software. The company focuses on offering an invariably high level of consumer satisfaction through extraordinary product implementation. Company's share entered the broader benchmark index FTSE 100 on 6th September 2016. It is the third largest software development company listed on the broader equity index FTSE 100 and largest UK based company listed in the United Stated bourses. [optin-monster-shortcode id="wxhmli4jjedneglg1trq"]
As on 14th February 2019, Company reported its unaudited preliminary results for the 18-months ended 31st October 2018.
Key Product Portfolio
- Analytics and Big Data
- Application development, test and delivery
- COBOL
- Collaboration solutions
- Information Management and Governance
- Business continuity
- IT operations management
- Mainframe
- Security
Key People
- Stephen Murdoch, Chief Executive Officer
- Kevin Loosemore, Chairman
- Karen Slatford, Director
Unaudited preliminary results for the 18 months ended 31st October 2018 ($ million)
Source: (Company Filing, LSE)
Key Takeaways
- The company has reported group revenue of $4,754.4 million and an operating profit of $376.8 million for the 18 months ended 31st October 2018.
- Pro-forma revenue of $4,058.0 million for the twelve months ended 31st October 2018, shows 5.3% decline on pro-forma constant currency basis as compared to $4,286.8 million reported in 2017.
- Groupâs Adjusted EBITDA stood at $1,529.6 million for the 12 months ended 31st October 2018 against $1,401.1 million reported last year.
- The company reported 37.7% Adjusted EBITDA margin for the 12 months ended 31st October 2018 against 33.1% reported last year.
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SWOT Analysis
Strengths
- Diverse Channel Presence
- Business Performance: Micro Focus
Weaknesses
- Net Working Capital Deficit
Opportunities
- Merger with HPE Software business
Threats
- Fragility of Network
- Rapid Technological Changes
One Year Stock Performance
(Source: LSE)
Stock Price Commentary
- On 19th February 2019, Micro Focus stock closed at GBp 1,812, up by 3.63 per cent against its previous day closing price.
- Stock's 52 weeks High and Low is GBp 2,077.00/GBp 782.20. At the closing price, the share was trading 12.76 per cent lower than its 52w High and 131.65 per cent higher than its 52w low.
- In last one-year, Micro Focus share has given negative returns of 11.95 per cent.
- Stockâs average traded volume for 5 days was 2,295,868.00 and 30 days â 1,279,767.70. The average traded volume for 5 days was up by 79.40 per cent as compared to 30 days average traded volume.
- On the valuation front, the stock was trading at a trailing twelve months PE multiple of 12.4x as compared to the industry median of 10.4x.
- The companyâs stock beta was 1.43, reflecting relatively high volatility as compared to the benchmark index.
- Total outstanding market capitalization was around £7.42 billion and a dividend yield of 4.92 per cent.
Conclusion
The companyâs growth prospects look favourable as innovations have been done to cut down on costs. Given the current trading levels which indicate the stock movement towards 52-week high with support coming from few growth drivers like $110 million extended share buyback programme and accelerated revenue growth, the market can keep a watch on Micro Focus stock going ahead.
