But let’s also take a look at how the company, which supplies advanced telecom systems to companies, acts.
On Tuesday, it reported “strong first half performance, continued cash generation and positive business momentum”.
It said that in the UK and Europe, its recurring revenues, combined with “selected price increases and strict cost discipline”, had helped to offset inflationary pressures while continuing to “proactively manage its supply chain”. As an example, given the difficulties with the availability of various types of hardware, it said it had deliberately built up inventories in its ‘indirect’ UK operations to more than twice pre-pandemic levels.
In Europe, it said that “good first-half financial performance” in the German operations “compensated for some headwinds in our smaller Spanish operations”.
These optimistic statements were reflected in the published figures. As usual with trading updates, the numbers were scant, but Gamma said it expected full-year earnings per share to be at the upper end of a range of 67.1p to 74.6p. If it hits this last figure, the shares will trade at £11.60 at 15.5 times earnings.
It also said it had increased its net cash balance to £72.6m halfway through, down from £49.5m at the end of the previous year. This improvement came despite a £1.7 million payment of “contingent acquisition fees” and early supplier payments in return for “attractive quick payer discounts”.
According to Questor, an earnings multiple of 15.5 is far from expensive for a company that has a long track record of growing revenue, earnings, cash generation and dividends, along with net cash on the balance sheet. Delay.
Questor says: wait
Share price at closing: £11.60