Enero share price jumps 7% as earnings rocket

The Enero Group Ltd (ASX: EGG) share price is gaining significant ground today following the release of a positive earnings report for FY22 this morning. 

At the time of writing, Enero shares are up 7.14% to $3.30 apiece.

The global marketing group reported revenue and bottom line profitability growth in its operating segments.

Value from the growth of these segments was transferred to its balance sheet, adding a large amount of cash and boosting net assets.

The outlook for FY23 is also positive, focusing on improving its existing book of business and realising synergy with its recently acquired companies.

What did Enero report?

Investors are pushing up the Enero share price on the back of a strong full-year result for FY22. Highlights include:

• Net revenue up 20.4% from FY21 to $193.4 million
• Operating earnings before interest, taxes, depreciation, and amortisation (EBITDA) up 36.4% from FY21 to $62.2 million
• Operating EBITDA margin up 380bps to 32.2%
• Earnings per share (EPS) up 17% to 30.9 cents

Enero reported strong EBITDA and net revenue growth for both its brand transformation and creative technology operating segments.

Net revenue for brand transformation increased by 11.3% to $106.7 million, while operating EBITDA increased by 13.6% to $24.2 million.

Net revenue for creative technology and data had a larger percentage increase of 34%, growing to $86.7 million. Operating EBITDA was also higher, with a 52.8% increase to $48.6 million.

The company also announced a dividend per share of 12.5 cents, which was down from 14.9 cents in FY21.

What else happened?

Enero strengthened its balance sheet, adding $48 million in cash to it in FY22. Net assets also grew 14.93% to $155.3 million. 

By adding digital transformation services to its product mix, Enero estimates it has a $1.2 trillion new addressable market, up from $488 billion through offering solely marketing services.

A fully franked final dividend of 6.5 cents was announced, which is a 48% increase on FY21’s final dividend. The dividend has a record date of September 20 and a payment date of October 4 this year.

What did management say?

Commenting on the results which have helped push up the Enero share price today, CEO Brent Scrimshaw said:

Throughout FY22 our global portfolio of innovative brands and services delivered strong operating results, continuing our trajectory of sustainable growth in revenue and earnings over the past five years.

In line with our operational strategy, Enero’s revenue base is now highly diversified across segments, industries, and clients.

What’s next?

Enero’s priorities for FY23 include improving its existing book of business and developing a focus on environmental, social, and corporate governance.

Enero said it would also integrate its most recent acquisitions into the business. Companies ROI DNA Inc, a B2B sales & marketing agency, and GetIT Ltd, a B2B technology marketing agency, were acquired at the start of July this year.

A focus on driving efficiency was also cited as a priority. This will reportedly be achieved through new processes and improved cost management.

Enero share price snapshot

The Enero share price has increased by 10% over the past 12 months.

Shares in the company are beating the S&P/ASX 200 Communication Services Index (ASX: XTJ) by a wide margin — it’s currently down 3% over the last year.

Enero has a market capitalisation of $274.78 million.

The post Enero share price jumps 7% as earnings rocket appeared first on The Motley Fool Australia.

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Motley Fool contributor Mtthew Farley has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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