Shares in the UK repair and insurance firm rose 8.6% in early trading on Thursday
Companies: HomeServe plc
Repair and insurance firm HomeServe says full-year profits will be at the top end of market expectations when it announces FY results in May, after seeing solid growth across its businesses and particularly strong performance in the US.
Consensus forecasts for full-year revenues are around £767m, with £80.7m net profit. Analysts are expecting a lot of growth from HomeServe, with EPS forecast to jump 32.7% to 25.5p.
As the market opened, HSV stock continued its recent rally jumping 8.6% to 615p, giving the FTSE 250 firm a market cap of £1.92bn. Its current P/E is relatively high for the sector at 24x earnings, but this falls to 18.7x in the next twelve months, closer to the industry average of 18.9x.
The Company, which works with insurers, energy, and utility companies to provide cover for heating, plumbing, electrical work, and security, said customer numbers had increased to 7.8m with products on offer to 100m affinity partner households.
Its core UK business had a strong year, with customer growth of 1% and an expanded partnership with Aviva. Busines in the US significantly expanded, with 3m customers and 50m partner households. In Spain, customer numbers grew 100k to 1.3m
CEO of HomeServe, Richard Harpin said he was delighted with the performance, stating that the Board anticipated results at the upper end of expectations:
"I am delighted with our performance this year. Given the strength of our strategic and operational progress, we anticipate delivering a performance at the upper end of expectations for the year ended 31 March 2017. This progress, combined with excellent prospects in all our businesses will provide the platform for further strong growth next year."
Investors should keep an eye on HomeServe's balance sheet, which has relatively high Net Debt of £257m, giving a Net Debt/EBITDA ratio of 2.59x. The firm does have £50m in cash/equivalents, but this fell from £70m in FY15.