Computacenter

[Philip Miller]

Why did shares of Computacenter explode more than 12% today? What is your assessment of the stock?
 

[Criss Edward]

Hi Philip, thanks for coming here. 

Indeed, Computacenter stock was one of the best FTSE performers today. The IT company released a trading update to note progress it made in the past few months as more companies turned toward IT-related solutions to overcome the lockdown measures. 

Computacenter hinted it won some big contracts as the investors are anticipating the next quarterly results.

“We stated in our trading statement on 23rd April 2020 that current trading was more robust than we had anticipated at the start of the crisis. Since that date business has accelerated further and we have managed to secure some substantial technology sourcing contracts due to our ability to scale our operations to meet the demand,” the company said in a trading update. 

As a result, investors hurled to invest in the stock, lifting its price more than 12% today. More importantly, the stock price closed above the 100-DMA, paving the way for more gains next week. The buyers are now expected to target the £16.00 handle, which represents around a 5% premium on the current market price.  

 

[Emilio Estavez]

Hi Phillip,

Shares of Computacenter (LON: CCC) have had a great rally over the past three months, gaining around 53% during that period.

Currently, the price of Computacenter’s stock is hovering around 1,647 mark but the main question now is how will the stock deal with the crisis caused by the coronavirus pandemic.

It all comes down to whether the computer company is in a position strong enough to deal with the economic issues and pull through the market volatility. To learn that answer, we need to analyze the company’s stock and look for its advantages. 

The Computacenter stock certainly has some strengths when it comes to important financial and technical measures. To be more specific, it’s a high-quality stock with great momentum. 

Throughout history, we learned that high-grade stocks are more stable and have the ability to accumulate good returns in the long run. Additionally, stocks with strong momentum in value and earnings indicate lots of positive trends in that stock. 

When it comes to technical measures, Computacenter has an outstanding 5-year Return on Capital Employed of 23.2%. Double-digit ROCEs, such as this one, indicates that the company’s stock has been growing quite profitably. 

Also, the share price of Computacenter has advanced around 52.7% on the market in the last 12 months. As I’ve mentioned before, factors like market volatility and economic turbulence can slow down the momentum, however, good quality stocks have an ability to pull through the turbulence quicker than usual and recover that momentum.

To summarize, Computacenter’s stock certainly has some great aspects to its business, however, according to some recent industry forecasts, analysts predicted a slowdown in the company’s earnings growth.

Let me know if you have any further questions.
 

[Hannah Fischer]

Hello Philip,

Analysts at German full-service investment bank Berenberg raised their target price on Computacenter’s stock from 1,700p to 2,450p today, saying its conviction reached all-time highs.

The bank said that it’s difficult to spot a company that delivers such good results in these circumstances. Computacenter exceeded analysts expectations from the start of the year and its stock is trading on a 19x price-to-earnings ratio and delivers a nearly 7% free cash flow return.

"How Computacenter trades on a 30% discount to European resellers is beyond us," said the Berenberg analysts.

Berenberg renewed its ‘buy’ rating on Computacenter’s stock and said the computer company is one of the most convincing investment opportunities in that sector. The bank pointed out that  Computacenter’s earnings estimates could still be 20% low.

The analysts believe that traders could make a total shareholder return of 45% over the period of 12 months.