Vocus Group Ltd (VOC) Review & Purchase
We’ve had a buy order on Vocus Group Ltd. (formerly Vocus Communications) for a few months now but the stock went up significantly earlier in the year before slowly receding back down to our purchase price. I like to put a limited buy order for a stock and wait until the price drops to that level. Sometimes it works quickly and other times it takes longer, but it’s a good way of getting a small discount on your initial purchase.
We bought 390 shares in VOC at $3.90/share on 7/4/17
From Google Finance:
Vocus Group Limited, formerly Vocus Communications Limited, is engaged in providing telecommunications and other services. The Company’s segments include Australia and New Zealand. It is engaged in the supply of broadband, fixed voice, mobile, data centre, cloud and energy services to consumer and business segments through the Commander, Dodo and iPrimus brands in Australia, and Slingshot, CallPlus and Orcon in New Zealand. The Company offers data network solutions, including Dark Fiber, which is a fiber-optic point-to-point connection; Ethernet services; Ethernet Multipoint, which simplifies layer 2 connectivity across multiple offices or data centers, and Internet Protocol Wide Area Network (IP WAN), which converges information and communications technology (ICT) services, such as Internet or Cloud Connect. The Company offers unified communication services, and also the cloud services, including cloud computer, backup and archive, and disaster recovery services.
We’ve recently started using Simply Wall St and used their software to analyses this company.
The share price has tumbled over the past 52 weeks after record highs of $9.40 in June 2016. This was mainly due to instability in the the resignation of their CFO, Richard Correll and a number of acquasitions.
The company experienced significant growth over the previous few years as it acquired a number of companies. The key now for VOC is to integrates these businesses and streamline their operations to generate more profit.
After recently reporting their half-year results, the share price jumped significantly before coming back down to December 2016 levels. A summary of their results is below:
- Revenue rose 403% to $888 million
- Statutory profit rose 95% to $47 million
- A fully franked half-year dividend of 6 cents per share was declared
Using a Discounted Cash-flow model, the intrinsic value of VOC can be calculated. This is done by discounting future cash flows to their present value. Simply Wall St uses analyst’s estimates of cash flows going forward 5 years.
Current discount (share price of $3.81): 63% – that’s a pretty healthy discount.
Dividend rate based on our purchase price is around 3.07%/annum. Not a huge return but I believe this stock has a lot of growth potential. Their current payout ratio is 74% with a projected ratio of 45% based on projected profits.
After doing research into VOC, we believe it’s a good investment. We use some of thier subsidiaries which is a good sign and the stock prices seems to be undervalued. This a long-term buy for us for yield and growth.