Computacenter Share Discussion Threads

[fuji99] 28/10/2022 09:33

A great company but won't be the exception when one looks at the US recent results:
The state of the world economy is starting to show via the US bellwethers. From Microsoft to Google/Amazon. The UK could be worse. So CCC won't escape the stagnation. Even CCC flagged up the slowdown next year.
MSFT 231.32 (-7.72%)
AMZN 115.66 (-4.10%)
META 129.82 (-5.59%)
NVDA 128.96 (-2.75%)

[boadicea] 28/10/2022 09:08

An interesting update this morning. Not quite a profit warning but a message to restrain our expectations as they go for future growth rather than maximise current returns. At least the unwinding of the precautionary high stock commitments should lead to healthy cash flow from that source coupled with the implication that it will be diverted to supporting the growth targets.
Maybe we should be expecting an acquisition or two. There are a number of small players in the relatively volatile cybersecurity field which might fit into their plans. Some of them seem rather expensive or too niche to be of wide interest; others look remarkably cheap but usually for a reason such as a stretched balance sheet or dubious history.
The share price progression seems to have already anticipated this scenario and further or exaggerated weakness would seem unjustified at present, given that there are positive as well as negative factors in the current mix.

[shauney2] 27/9/2022 23:10

It's also worth looking at the Hadley trust via Philip Hulme.htTps://www.investegate.co.uk/Index.aspx?searchtype=1&words=Philip+hulmeWhatever his intentions CCC has got to be top of the pile of any US interest with its cash pile, cheap rating and US earnings.

[boadicea] 27/9/2022 21:25

That's a huge holding to acquire from nothing previously notified. It would be interesting to know the background and whether it has a particular significance for the run of the mill shareholder.

Edit: The answer in part is here, the significance is less obvious -

[countryboy] 09/9/2022 17:01

How long before we see interest from private equity firms in the US at current exchange rate?

[countryboy] 09/9/2022 16:57

How long before we see interest from private equity firms in the US at current exchange rate?

[boadicea] 09/9/2022 11:25

One fact to note is that the profit reduction in H1 is due to the product mix including some large low margin contracts as previously flagged. We can only trust that these create good entry points to future opportunities. Importantly the reduction is totally unrelated to the revenue reduction resulting from the change in recognition criteria which appear very sensible andcorrect. This will improve the notably low price/revenue ratio of the stock.

Today's market reaction seems unduly harsh on a stock that has not looked over-valued compared to its peers and which should also be gaining from currency rates - about 1/3 income is in dollars. If it comes good on the outlook statement, "... we remain on track to deliver our stated expectations of profit growth for the year as a whole", then it will look distinctly cheap at today's price imho.

PS: Out of interest I decided to compare the price/revenue figure for CCC with some others in the broad sector. CCC is quoted on advfn as 0.4 and falling. (It will be higher under the new revenue recognition rules, probably nearer 0.5.)
At the other extreme was CER with a ratio of 10.9 and rising ! (I excluded blue sky floating-on-air companies with negligible revenue.)

[ironstorm] 09/9/2022 10:34

so has the market . . .

[mngf] 09/9/2022 09:03

I read this negatively, was surprised by lack of reaction first up

[ironstorm] 09/9/2022 07:52

Not a profit warning. An in-line forecast for the year and a planned reduction in profit this half.

[scepticalinvestor] 09/9/2022 07:25

Ouch profit warning

[boadicea] 02/9/2022 09:41

Wake up and read the date! It closed up on the 31st Aug when the market was generally down.
Everything (almost) closed down on 1st Sep including CCC as you saw.

[countryboy] 01/9/2022 17:46

How was it a good day? Closed 3.2% down.

[boadicea] 31/8/2022 16:34

With dollar income accounting for almost 30% of revenue (similar to UK) and the pound weak, it is perhaps not surprising that we are having a good day somewhat against the trend. Maybe also some optimism ahead of interims slated for Friday week.

[boadicea] 29/4/2022 17:55

The company seems to be following a sensible strategy which should pay off in the medium to long term.
"There are clearly many challenges in the world and we, like most companies, are affected by wage inflation and supply chain shortages, but these offer us opportunities to differentiate from our competition with superior execution."

It looks good value to me and any short term weakness (not unlikely in current market conditions) could be an advantageous opportunity to accumulate.

[aewail] 29/4/2022 12:13

A very pleasing Q1 2022 Trading Update.With strong top line growth - Onwards and upwards.https://www.proactiveinvestors.co.uk/LON:CCC/Computacenter-PLC/rns/1133083

[matthew palmer] 09/4/2022 12:41

Anyone on TECHINVEST, I am wanting to form a group of similar minded people to discuss its views etc and information.

Click my name and send a message.

[boadicea] 04/4/2022 13:05

Shadowing the £30 threshold tantalisingly for some time now and looking resilient in the face of market worries. At least the heavy share price discourages lightweight day traders. Ultimate progress will depend substantially on how well the company continues to manage supply line issues compared to its competitors.
On traditional metrics it continues to look very good value to me.
Maintaining customer loyalty through difficult times by accepting some pressure on margins due to purely temporary factors (eg: increased stock-holding, transportation cost spikes etc.) could be a price worth paying for future growth.

[boadicea] 18/3/2022 08:07

Given the excellent resuls and track record this should be well into the thirties and could be pushing on to 40 quid when markets recover their poise.

[km18] 16/3/2022 15:37

Computacenter plc is an emerging and independent technology partner corporation which enables customers to source, transform and manage their technology infrastructure, to deliver digital transformation, enabling people and their businesses. As a result, the firm supports its customers to meet their technological needs while arranging commercial structures and supply chain services. Consequently, it implies that Computacenter is a provider of structured solutions and resources to assist clients with deploying digital technology to achieve corporate objectives. Considering the firm’s vision and mission, its IT solutions involve security, data center, workplace, network, user productivity and service desk. Given the wide product portfolio, the firm derived multiple sources of income which in turn forced up operating profit from £198.5m to £255.1m in 2021. The sudden profit hike was incorporated into the firm’s EV/EBITDA of 9.42, hence capturing intrinsic value. Subsequently, Computacenter optimised its equity from £630.9m to £744.8m in 2021, which in turn led to a return on equity of 29.2%. Furthermore, operating, investing, and financing activities were effectively funded, illustrated by the P/FCF of 20.3. Given that tech stocks are currently trading at a P/E of 30x, Computacenter is undervalued since the firm’s P/E ratio stands at 16.8, signifying that the security is expected to surge in value, illustrated by the P/B ratio of 4.7.



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[sunshine today] 16/3/2022 12:21

I totally agree the bigger the company the more difficult to obtain super fast growth.


Obviously the trick is to sell a stock when you did after it’s been re rated to the sector average or above.

The PE looks low here after todays results

[boadicea] 16/3/2022 10:27

sunshine - It's not easy to grow a large company as fast as a small one!
TRD will be fine until it isn't. I held DOTD for a time until it looked overpriced so I sold most of them (thankfully). One slight slip and the roof falls in.

[sunshine today] 16/3/2022 09:30

I accept the PE is low so 30% upside from here short term.

But it’s not in the growth league of TRD a tiny premium listed share that’s growing at 100%.

Good luck.

[boadicea] 16/3/2022 09:11

An amazing lack of comment on stonking results which illustrate the undervalued nature of this slightly boring (?) company. I am happy to be bored!

Revenue +23.6%
Adjusted eps +31%

The results would have been even better if the pound had its current value vs the dollar, now ~2.6% down. The effect on profit is complex but the 2.6% would largely be on margin but also dependent on the currency of supply.

The effects of supply issues were covered in the following points which I quote -

"While supply chain shortages were an issue, these gave us an opportunity to outperform our competition through the performance of our well-developed supply chain. Many of our larger customers are highly reliant on deploying new technology and they have taken to ordering much further in advance. While this gives us greater visibility, it has also meant an increase in the inventory we are carrying. We do expect our inventory to return to more normal levels as supply chain constraints ease.

"Throughout the year, product shortages have materially impacted the supply of key equipment for our customers, with some orders being materially delayed or only partly fulfilled. Whilst product availability increased during December, the unexpected impact on working capital through the year was significant. Inventory levels have increased across the business, as a result of carrying stock for orders that we cannot deliver without a critical part or, increasingly through the year and particularly in North America where customers have ordered early and subsequently delayed delivery, as data center facilities are not ready. We do not expect inventory to return to normal levels until there is a longer-term supply improvement.

"The Group had GBP341.3 million of inventory as at 31 December 2021, an increase of 61.5 per cent on the balance sheet as at 31 December 2020 of GBP211.3 million. Over three quarters of this increase was attributable to our North American Segment, which had closing inventory of GBP212.5 million (2020: GBP103.2 million).
While supply has been restricted, demand has continued to rise, with our product order backlogs across all geographies at all-time highs and considerably larger than at the end of 2020. This gives us a high degree of confidence that the Technology Sourcing business will be well placed to benefit in the year ahead.
We remain alert to ongoing product shortages, and further strengthening of the pound would create a stronger FX translation headwind."
[End quote]

I await revised broker comments and targets with interest.