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Interquest - cracking results

By Tom Winnifrith & Steve Moore | Thursday 12 March 2015

Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from ShareProphets). I have no business relationship with any company whose stock is mentioned in this article.

Specialist recruitment group InterQuest (ITQ) has announced results for the 2014 calendar year and that “early trading in 2015 has been in line with management's expectations and the benefits of a bigger contractor book are being seen”.

The results for 2014 show an adjusted pre-tax profit of £4.50 million on net fee income of £23.25 million (revenue: £150.65 million), generating earnings per share of 9.6p, up from 5.1p. Even after £3.51 million of investment spending (including on acquisitions) and £0.86 million of dividends paid, net debt was reduced by £0.67 million to £8.33 million. A 2p per share dividend is proposed to be paid on 15th May, with an ex-dividend date of 16th April, maintaining a total annual dividend of 2.5p per share.

Confidence is rooted in a focus on recruitment for some of the market's most in-demand, technological skill sets and though leaving its 2015 forecasts unchanged for now (having upgraded in January), house broker Charles Stanley notes “the optimism of the company with it adding c30 new sales consultants in 2015 (i.e. c10% increase) to reflect the rising demand and its focus on organic growth”.

With forecasts for earnings per share to rise comfortably above 11p this year, a current share price of 92.5p looks much too harsh an appraisal.

The price compares to an 88p offer price at which the shares were originally tipped by the two of us and more than 130p reached in October. The current level looks to significantly reflect the subsequent termination of a formal sale process,  but, with continuingly positive trading momentum, we continue to rate the shares a buy at up to 105p

This article first appeared  on the Nifty Fifty website run by Tom Winnifrith, Steve Moore and Lucian Miers - sorry paying customers come first. To read Lucian's next shorting idea later this week and to catch the next value investment share tip from Tom & Steve out shortly click HERE



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