motely fool2 Dec 2015 12:19
Iomart
Shares in cloud hosting provider Iomart fell by more than 10% this morning, after the group published its interim results.
Sales were up by 16% to £36.3m, while adjusted earnings per share for the first half rose by 11% to 6.75p. These figures suggest to me that when the impact of recent acquisitions is included, Iomart should hit full-year forecasts for earnings of 14.7p per share.
However, somewhat unusually, Iomart did not confirm that is was on track to meet full-year forecasts. The firm also warned that overheads will rise as new skilled staff and management are recruited to help support the company’s ongoing expansion.
Iomart appears to be facing increased competition from cloud hosting providers such as Amazon Web Services (AWS). To combat this, Iomart is planning to shift its focus towards offering software services for customers using hosting providers like AWS.
It’s not clear to me how this gradual change will affect Iomart’s profit margins.
Even after today’s fall, Iomart shares have risen by 59% so far this year. The shares now trade on a 2015/16 forecast P/E of around 18, falling to 16 in 2016/17.
I’m not sure now is the best time to buy.