Altium – FY20 Reviewed

Altium creates software to help people design circuit boards for electronic devices. Altium has aspirational targets of $US500 million in annual revenue and 100,000 subscribers by 2025.

FY20 EBITDA was better than consensus with FY20 revenue of $189m, + 10% on the same time last year, EBITDA $72m. The company generated record subscriber growth, surpassing its 50,000 subscriber goal.

Full-year unfranked dividend increased to $0.19 and earnings before interest and tax climbed 13% to $US64m for the year ended June 30.

A highlight for the company in the last 12 months was the launch of its cloud-based electronic design subscription platform Altium 365. For 2021, the company forecast revenue growth to be in the range of $200 – $212mn or an increase of 10%.

Altium – algo update

Altium switched from sell to buy conditions in July 2018 at $21 and more recently we had an Algo Engine buy condition again in May at $31.00.

ALU is a strong momentum play and the stock is now up 10% in the past 4 weeks. We continue to hold ALU and will look to take profit once the short-term indicators turn negative.

Altium – Valuation View

Altium is under current Algo Engine buy conditions and the positive price momentum and recent inclusion into the ASX 100 index, has us digging a little deeper into the fundamentals.

The stock trades at a lofty PE valuation of 56x forward earnings. However, the company has a strong track record of above average EPS growth. FY20 the market is looking for EPS to increase 20% from $0.41 to $0.50 cents per share. FY20 revenue is forecast to jump from $175m to $215m .

The stock currently trades on a  dividend yield of 1%.

We’re comfortable to view this as a momentum play and remain long the stock whilst it trades above our $29 stop loss.

 

 

 

Altium Ltd – Strong Price Momentum

Altium is now under Algo Engine buy conditions.

Altium Limited is an American, Australian domicile owned public software company that provides PC-based electronics design software for engineers who design printed circuit boards. Founded as Protel Systems Pty Ltd in Tasmania in 1985, Altium now has regional headquarters in the United States, Australia, China, Europe and Japan with re-sellers in all other major markets.

As a recent addition to the ASX 100 index we will begin to analyse the financial performance of the business and update you on future research.