MicroFocus - a buying opportunity?

[minerjoe]

17% price fall today, I think this might be a nice opportunity to buy/top up a company with solid cover and a track record in decent dividend raises. Its a low start yield for a HYP but the growth is exceptional. Had a little trouble with the recent acquisition from HPE, but I don't see anything major here to worry about yet for a long term holder.

Moderator Message:
Subject title mis-spelling of MicroFocus corrected -- MDW1954

[Itsallaguess]

17% price fall today, I think this might be a nice opportunity to buy/top up a company with solid cover and a track record in decent dividend raises.

Its a low start yield for a HYP but the growth is exceptional.

Had a little trouble with the recent acquisition from HPE, but I don't see anything major here to worry about yet for a long term holder.

This is one of those shares that's difficult to sell as a HYP share with the above yield figures, because the share price has done so well in recent years to keep the yield relatively suppressed, even with the above dividend-growth figures taken into account -

https://yhoo.it/2AFwo19

It's also a company that has a habit of paying out special-dividends. I'm not sure if those have been taken into account in the above figures.

I've been a holder for a number of years, but sold the bulk of my holding last year as part of a rebalancing process. I've got a few left that I'll hold onto long term.

Cheers,

Itsallaguess

[monabri]

Described as "High growth potential average dividend payer"

And also from SimplyWallStreet

"Micro Focus International plc, an infrastructure software company, develops, sells, and supports software products and solutions to federal, airlines, and healthcare industries in the United Kingdom, the United States, Germany, France, Japan, and internationally."

https://simplywall.st/stocks/gb/softwar ... nal-shares

Yield is ~3.6% (77p/2145p close) - specials were share consolidations in 2012 to 2015.

Debt is reducing and is covered 4x by EBIT.

Nothing to complain about regarding previous growth

https://www.dividenddata.co.uk/dividend ... ?epic=MCRO

I decided to "add" - it is now just a tad over 1% over my HYP (I knew those divis wouldn't last long before being deployed ).

"Micro Focus"


ps there's an article in TMF today.

[moorfield]

Had a little trouble with the recent acquisition from HPE, but I don't see anything major here to worry about yet for a long term holder.

http://www.cityam.com/278371/micro-focu ... perational

But with acquisition sales stripped out, Micro Focus posted a 2.9 per cent fall in revenue to $664.7m and earnings fell by 4.1 per cent.

Does that not worry you ?

The FT tells me the last dividend was 74.30p, which would put the yield at 3.5%. Not my cup of tea at all.

[monabri]

Similar dividend yield to BAE Systems or BATS but the 5 year CAGR for Micro Focus was 21.3% and the 10 year CAGR was 24.25%.

From the trading update :

http://www.londonstockexchange.com/exch ... 87714.html

"The Interim dividend increased by 16.4% to 34.60 cents per share (2016: 29.73 cents per share) in line with dividend policy of full year dividend being twice covered by adjusted earning".


For comparison the 5,10 & 15 year CAGR:-
BAE 2.40%, 6.09%,5.82%.
NG 2.28%, 5.39%,7.67%
VOD 5.53%, 3.96%,12.59%
ULVR 7.91%,6.89%,6.47%


(all data from dividend data)
https://www.dividenddata.co.uk/dividend ... &order=#AV.

p.s. "Micro Focus"

[Arborbridge]

Does a big one day fall like that sound alarm bells? I'm told it should have done in the case of Carillion which has similar (though less in one day) declines before it plunged off a precipice.

Arb

[monabri]

Just to come back on the fall - AstraZen on July 27th 2017 (5113p to close at 4325p) down 15% on the day. It actually fell lower - I picked some up at 4275p & 4305p.

Ok, Mkt cap of AZN is 65 billion (having recovered to 5165p) versus MCRO at 9.3 billion after yesterdays fall.

[Arborbridge]

Yielding 3.4% today - is that HYP?


Arb.

[idpickering]

Yielding 3.4% today - is that HYP?


Arb.

Hardly worth the risk, so IMHO, no.

Ian.

[Alaric]

So much jargon and I am no better informed as to what the company actually does for a living.

I might not be totally up to date, but it is or was a supplier of commercial software. There's a computer language which goes back to the 1950s, namely COBOL. Microfocus as far as I'm aware had/has a version that ran on PCs and similar. That enabled legacy systems to run on more modern hardware. A niche market perhaps, but a profitable one.

https://www.microfocus.com/products/cobol-development/

[monabri]

COBOL being the programming language used in days of yore but then all the COBOL programmers retired ..
https://www.google.co.uk/url?sa=t&sourc ... bVGjvvBqI5

SUSE Linux is of German origin, basically an acronym of “Software und System-Entwicklung” (software and systems development).

A "pure play" company is a company that focuses only on a particular product or activity.

https://www.fool.com/knowledge-center/w ... -play.aspx


Micro Focus International plc, develops, sells, and supports software products and solutions to federal, airlines, and healthcare industries in the United Kingdom, the United States, Germany, France, Japan.

It provides software products in the areas of collaboration, endpoint management, file and networking services, identity and access management, information archiving, security management, terminal emulation, and software delivery and testing, as well as COBOL development and mainframe, and data center solutions.

Micro Focus International plc was founded in 1976 and is headquartered in Newbury, the United Kingdom.

Approx 16000 employees (increased from ~4000 following the merger with Hewlett Packard Enterprise)

[minerjoe]

In a nut shell they buy old legacy software and manage/grow it. Lots of companies want to develop new things rather than manage IT systems from the early 90s or 2000s

[UncleEbenezer]

I contemplated posting this, but didn't have the time&energy to dig up the OP's figures in support of a post.

Micro Focus specialises in picking up fallen (or at least waning) stars in the software business, and adding value to them. Historically it's been extraordinarily successful. HPE's predecessors as acquisition targets include such big names as Borland and Novell.

[jackdaww]

Yielding 3.4% today - is that HYP?
Arb.

Hardly worth the risk, so IMHO, no.

Ian.

================

almost HYP and may not be for long.

a possible buy for me.

[UncleEbenezer]

What do you call today's RNS? Like a profit warning in reverse: i.e. profits will be materially higher than anticipated. Share price taken a boost, but still well short of the pre-HPE peak.