ii view: Computacenter exceeding market expectations

Full-year trading update to 31 December

• Currency adjusted gross invoiced revenues up 32% 

Guidance:

• Now expects full-year adjusted pre-tax profit of not less than £270 million, up from £254 million in 2024 and comfortably ahead of market expectations for £243.4-£259 million
• Expects to make further strategic and financial progress over the 2026 year ahead 

ii round-up:

Computacenter (LSE:CCC) is one of the world's six largest resellers of information technology hardware and software.

As well as supplying IT equipment and software, Computacenter also advises organisations on IT strategy, implements the most appropriate technology, optimises performance, and manages its customers’ infrastructures. 

For a round-up of this latest trading update announced on 22 January, please click here.

ii view:

Began in 1981 and headquartered in Hertfordshire, Computacenter today employs more than 21,000 people. Hardware and software sourcing generate most revenues at just over four-fifths, with service-related sales the balance. Geographically, North America generated most revenues during the first half at a 50%. That was followed by the UK at 22%, Germany 17% and Western Europe most of the 11% balance. Group customers do or have included Microsoft, IBM, Dell Technologies, Cisco, and Transport for London.

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For investors, sales softness and a focus on weak public sector demand was previously flagged across Germany and France. Increased costs including IT wages and employee taxes in some countries such as the UK should not be ignored. A forecast price/earnings (PE) ratio broadly in line with the three-year average may suggest the shares are not obviously cheap, while corporate investment in technology is cyclical and subject to ups and downs. 

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More favourably, AI requirements, IT efficiency, digitalisation and cyber security all remain key focuses for companies, organisations, and governments globally. Customer sector and geographical diversification exist. Major customers totalled 197 as of late September, up from 183 in late September 2024, while shareholder returns since floating on the stock market now exceed £1 billion. The shares now offer a forecast dividend yield of around 2.5%. 

For now, and despite ongoing risks, both the AI investment boom and consensus analyst fair value estimate above £34 per share appear to offer grounds for continued optimism. 

Positives: 

• Product and customer sector diversity
• Exposure to potential AI requirements

Negatives:

• IT sales are often volatile
• Currency moves can impact

The average rating of stock market analysts:

Buy