This company, which primarily markets industrial products and technology products directly to customers including companies, government, and education institutes, has been grouped into technology solution marketer sector in information processing equipment industry.
It seems that the demand for technology products and service and industrial products and service provided by companies in this sector has been strong and growing fast in the past two years thanks to strong demand from for profit business customers in North America and Europe. However, the demand from public sector customers has been seen declining in US market.
Shift of sales/mix to higher products and service and leverage of fast increased revenue improved companies’ margin. The typical gross margin is about 15% and with a SG&A as percentage of sales of 14% the operating margin is about 1% in 2018. The typical enterprise price/EBI ratio is 46.
It seems that the demand for industrial products, from North America, and technology products, from Europe, of this company has been increasingly strong in the past several years primarily attributable to increased demand of business sector.
The first three months of fiscal 2018 compared with the same period of 2017 (ended March 31 2018)
Net revenue increased about 17% attributable to increase of 12% in industrial products and increase of 27% technology products.
Fiscal 2017 compared with fiscal 2016
Net revenue increased about 8% attributable to increase of 11% in industrial products and increase of 5% technology products.
Fiscal 2016 compared with fiscal 2015
Net revenue increased about 2% attributable to increase of 2.4% in industrial products and increase of 2% technology products.
Its gross margin went up from about 25% to 28% in 2018 due to shifting of sales mix to higher margin products and rising prices. With the slightly improved SG&A as percentage of sales (down to 22%), we see an improvement in its operating margin (up to about 6% in 2018). Its average EBI/share increased significantly in 2018.
Stock performance
This company is having an enterprise price/EBI ratio of 24. We think that its stock is being relatively fairly valued,
