The McMillan Shakespeare Limited (ASX: MMS) share price has soared by more than 16% today after the company released its FY19 results to the market this morning.
McMillan Shakespeare is Australia’s largest provider of salary packaging and novated leasing services as well as a provider of fleet and asset management and financing. From its beginning in 1988, McMillan Shakespeare now has over 1,200 staff and 21 subsidiaries that include Maxxia, RemServ and Holden Leasing.
What Has Investors So Excited?
The company recorded an increase in net profit of 27% to $63.7 million, despite only a slight increase in revenue of 0.7% to $549.7 million for the 2019 financial year.
EBITDA was down 7.4% to $132.8 million whilst underlying earnings per share (EPS) was down 5.2% to $1.07 per share.
McMillan saw a growth in cashflow across all its divisions which include Group Renumeration Services (GRS), Asset Management and Retail Financial Services (RFS).
The company announced a fully franked final dividend of $0.40 per share, which is in line with the FY18 final dividend. This brings the full year dividend to $0.74, placing McMillan shares on a dividend yield of 4.8%.
Perhaps what has given the biggest boost to today’s share price gains is the announcement of an $80 million off-market share buy-back. McMillan has a track record of strong capital management and investors have seen this announcement as a big positive.
Current shareholders who decide to retain their shares will benefit from the inevitable rise in EPS owing to the reduction of total shares on issue.
Should You Buy Now?
Following the result, McMillan’s share price has reacted strongly, up more than 16% from yesterday’s closing price at the time of publishing. Whilst I think McMillan is a quality business, I believe there are better opportunities to be found in other ASX growth shares right now.
[ls_content_block id=”14947″ para=”paragraphs”]
At the time of publishing, Luke has no financial interest in any company mentioned.
