Altium Ltd (ASX: ALU) shares are well-known on the ASX.
Since 1985, Altium has been developing software and hardware aimed at creating the best electronic design solutions possible. Altium Ltd listed in 1999 and has since provided remarkable growth for investors. But is this a case of “what goes up, must come down”?
Before looking at what drives the growth, it should be noted just how astonishing Altium’s growth has been.
Over the last year, Altium produced a return of about 59% for investors, even after falling in price from August to December 2018. Even more impressive, over the last three years, the Altium share price has seen growth of 75.5% annually, and 62.7% annually over the five-year period. It now sits at a share price of around $24.70, a fair increase since its listing in 1999 at under $3 per share.
Looking at the numbers, it’s not hard to see why it has grown so much. In 2018, revenue grew 26.5%. Along with this revenue growth, Altium’s profit margin increased to reach 26.7% for the year.
Adding to the positives, Altium has a debt-to-equity ratio of 0%, and cash on hand increased to a total of over $52 million in 2018.
Despite the high cash balance, Altium boasts a return on equity of nearly 25% and has achieved a steady increase in cash flow, sales and earnings over the last three years. There seem to be countless positives for this company as they continue to grow at this unprecedented rate.
How Long Can It Last?
Altium has produced impressive figures for the last few years but it should be considered whether or not that level of growth is sustainable. The company has an ambitious revenue target of $200 million by 2020, and there is still some way to go to reach that target.
They aim to achieve this goal by boosting their sales force in the core printed circuit board (PCB) business to, “ensure the appropriate resources are in place to support organic revenue and profit growth” (2018 Annual Report).
Altium is scheduled to release HY2019 results on the 18th of February which will provide valuable insight into their progress to reaching their revenue targets. Andi if the growth that they have been showing recently continues, I see no reason why the share price can’t continue to climb higher. This is certainly a company to keep an eye on.
Free 2019 Report: 2 Rapid-Growth Shares
NEW SMALL CAPS INVESTING REPORT!
After searching through a market with over 2,000 shares, our lead expert investment analyst has narrowed it down to just 2 of his favourite rapid-growth shares in a FREE report to Rask Media readers.
Over the past five years, these two shares have gone from being 'tiny caps' to being serious contenders for the ASX 300.
Idea #1 is taking on the world with an online marketplace capable of generating serious free cash flow. This company's addressable opportunity is multiples of its current valuation.
Idea #2 is a technology business with super-sticky revenue and mission critical software. With operations around the globe, this growth stock has many years of potential.
Access the free report by clicking here now. Absolutely no credit card or payment details required.
Disclaimer: Any information contained in this article is limited to general financial/investment advice only. The information has not taken into account your specific needs, goals or objectives, so please consider consulting a licenced and trusted adviser before acting on the information. Please read The Rask Group’s Financial Services Guide (FSG) for more information. This article is authorised by Owen Raszkiewicz of The Rask Group, which is a corporate authorised representative No. 1264179 of Strawman Pty Ltd (ACN: 610 908 211) (AFSL: 501 223).
Disclaimer: At the time of writing, Max does not own shares in Altium Ltd.