At yesterday’s AGM, Computershare gave guidance for FY17 which suggests the group has found an inflection point in their earnings. After almost 2 years of earnings downgrades and underperformance, management is increasingly looking towards mortgage servicing for growth, as the mature share registry business faces structural pressure.
CPU guided towards FY17 EPS to be marginally up on FY16. Contribution from Mortgage Servicing is required to deliver the growth.
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Forecast FY17 revenue $2b on EBIT of $500m, EPS of $0.57 and DPS of $0.27 placing the stock on a forward yield of 3.3%.
We continue to remain cautious and question the certainty of a sustained turnaround in earnings. We continue to watch this name from the short side. The algorithm engine will be tracking CPU for a short signal as the market bounces back after the post Trump victory rally.
Chart – Computershare
