Although we don’t believe in timing the market or panicking over every stock fluctuation, understanding how a business is performing, competing and changing is vital to sensible investment.
What: Shares of AVEVA (LSE: AVV) — not to be confused with mega-insurer Aviva — soared by 12% this morning after beating market expectations in its annual results.
The company, which provides engineering data software for the likes of Shell and Siemens, boosted revenues by 8% to £237m for the year, generating £52m of cash in the process.
So what: AVEVA may not be a household name, but among investors, its reputation is growing — the company delivered an operating margin of 29% in these results, earning a return on capital of more than 18%.
Apart from a one-year blip during the financial crisis, AVEVA has now grown its sales and profitability every year since 1997, a remarkable feat.
This was just “another year at the office” for AVEVA it seems, which has made a habit out of quietly producing impressive returns for its shareholders.
Now what: That doesn’t mean AVEVA isn’t already highly rated by investors of course. Despite losing nearly 30% of their market value since last summer, the shares have rarely looked inexpensive, and even before today traded on a forward P/E of 22.
