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InterQuest Interims - Very much on track: buy

By Tom Winnifrith & Steve Moore | Wednesday 9 September 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.

InterQuest Group (ITQ) has announced results for the first half of 2015 and that “we enter the second half of 2015 with positive momentum, positioned well to capitalise on the opportunities in the second half of the year and beyond”.

This follows its focus on recruitment within specialist disciplines in the ‘digital economy', augmented by a growing managed service capability, having seen it deliver an adjusted pre-tax profit of £2.51 million on net fee income more than 6% higher than in the corresponding 2014 period, at £12.11 million, generating earnings per share of 5.7p, up from 4.9p.

After particularly tax and £0.52 million of dividends paid, net debt was reduced by £1.48 million to £6.86 million, whilst current assets increased by £2.42 million to £30.07 million and current (and total) liabilities by £2.24 million to £28.42 million.

The earnings performance, cash generation and positive outlook are to see the interim dividend doubled to 1p per share – to be paid on 16th November, with an ex-dividend date of 22nd October.

The results and outlook thus justify our confidence following another recent management change, when we noted that we looked for the interim numbers to put the company on course for full-year earnings per share of 11p+ (a pre-tax profit of more than £5 million, 2014 earnings per share: 9.6p) and a further fall in net debt.

This they have done and, although the shares have responded somewhat - back to above 90p, they continue to look too lowly rated and at 100p and below very strong value. The shares remain a  buy.

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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