The six months to the end of September for Eckoh (LON:ECK), the customer engagement security solutions group, showed it performing very strongly.
Group sales expanded impressively by 33% to £19.6m, while its profit performance was 50% better.
The end of the first half-year saw the group, which has offices in both the UK and in the US, showing a net cash boost of £4.4m, up from £2.8m at the end of March this year.
Ideal solutions in difficult economic times
Its services and products help its clients to take payments and transact securely with their customers through all customer engagement channels.
The company offers merchants a simple and effective way to reduce the risk of fraud, secure sensitive data and become compliant with the Payment Card Industry Data Security Standards and wider data security regulations.,
The £125m group operates and offers solutions within a broad range of vertical markets and includes government departments, telecoms providers, retailers, utility providers and financial services organisations amongst its clients.
Increasing orders
Total order levels increased strongly in the first six months, up by 50% to £17.6m.
There was a significant advance in the group’s annual recurring revenues line, up some 52% to £27.8m at the end of September.
“Despite the ongoing macro-economic uncertainty, the Board expect revenue and profit for FY23 to be significantly higher than FY22.
The Group is trading in line with consensus market expectations, supported by long-term structural growth drivers, increasing Cloud adoption and Eckoh’s strengthening product offering.”
Analyst opinion – 86p Target Price
At the group’s brokers Canaccord Genuity Capital Markets its analysts reiterated their Buy recommendation on the group’s shares.
They now have a Target Price of 80p on the group’s shares.
For the current year to end March 2023 they estimate sales of £40.5m (£31.8m), with adjusted pre-tax profits of £7.3m (£5.2m), generating earnings of 1.9p (1.3p) and easily covering a 0.8p (0.7p) dividend per share.
For the coming year the brokers see sales of £43.8m, profits of £8.2m, earnings of 2.0p and a dividend of 0.9p a share.
The brokers were impressed by the strong order intake, noting that the shares offer “a defensive opportunity in the context of an uncertain macro backdrop, as its security offering sees ongoing demand amongst an increasingly global client base.”
Over at Singer Capital Markets, their analysts also rate the shares as a Buy, but looking for 92p as their Target Price.
They note that new product launches due in the coming months are set to support Eckoh’s goal of doubling its share of wallet amongst its customer base.
Conclusion – add more to portfolios
The group’s shares, which were up to 64p this time last year, at just 42p have yet to really respond to the good news now shining through, which gives investors the opportunity to tuck a few more into their portfolios.