Shape Australia Corporation Ltd (ASX: SHA) might not be the most well-known stock, but its share price performance over the past year is worth noting.
The company has delivered a 12-month share price return of 114.9%, and according to Shaw and Partners’ analyst team, there’s more upside to be had.
So what does the company do?
As the Shaw team explains:
Shape is a national construction services specialist focused on commercial fit outs, refurbishments, modular construction, façade remediation, and select new build projects. Founded in 1989 and listed on the ASX in 2021, SHA operates across all Australian states and maintains strong client loyalty, with about 81% of revenue from repeat clients.
Shape’s most recent first-half results indicate a company that is travelling well.
The company reported first-half revenue of $553.3 million, up 16% on the previous corresponding period, and net profit of $14 million, up 49%.
Shape Chief Executive Officer Peter Marix-Evans said it was a strong result:
Our diversification strategy continues to deliver tangible results, particularly our expansion into non-office sectors. Additionally, during the half, project wins in the education sector increased 170% to $153.5 million, driven by a combination of fitout and refurbishment work in the tertiary category and modular projects in schools. We also saw momentum in emerging sectors, with the industrial and data centres sectors achieving a combined $137.4 million in project wins, compared with $7.0 million in 1HFY25, and further expansion into aged care with project wins of $57.5 million.
The company said it was well-placed going into the second half with backlog orders up 33% and a diversified pipeline of projects.
The Shaw team said the company had done a good job of diversifying its work streams.
Aided by acquisitions, Shape has diversified its sector exposure into more resilient sectors including healthcare, defence, education, hospitality, and retail, and has expanded into solutions that capture more of the project lifecycle such as design & build and aftercare/facilities maintenance. This strategic shift contributed to its impressive financial results.
Shaw said Shape had a market-leading position in high margin fit out and a strong pipeline and net cash position.
Shares looking cheap
The Shaw analysts recently upgraded their price target for Shape from $7.40 to $8.25 per share, compared with $6.49 currently.
Shape also pays a dividend yield of 3.07%.
Shape was valued at $541.9 million at the close of trade on Tuesday.
The post After more than doubling over the past year one broker sees more upside for this ASX small-cap stock appeared first on The Motley Fool Australia.
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Motley Fool contributor Cameron England 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 recommended Shape Australia. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.