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Looking for growth stocks? Pay attention to Servoca

15 Dec 2016 • About Servoca ($SVCA) • By InTwits

Servoca is a fast-growing stock in Support Services industry. Its revenue performance, profitability and healthy financial model stands it out vs. other public companies on the market.

Growth story

Servoca showed fast growth in the last financial year. Servoca's revenue surged on 17.8% in FY2016. In addition to revenue Servoca also keeps delivering EBITDA growth. It was 19.1% in FY2016

In the last 3 years Servoca showed fast revenue growth of 17.2% from FY2013 to FY2016 annually. EBITDA surged on 52.2% from FY2013 to FY2016 annually.

Servoca ($SVCA) financials for the last 5 years

mln. £ FY2012 FY2013 FY2014 FY2015 FY2016
Revenue growth, %1.3%13.8%20.0%17.8%
Gross margin, %28.2%28.5%29.0%28.7%26.9%
SG&A, %23.8%21.9%
EBITDA growth, %165.9%89.5%56.3%19.1%
EBITDA margin, %0.972%2.55%4.25%5.53%5.59%
Net Income-01123
Net Income margin, % -0.118%1.33%2.50%3.75%3.86%
CAPEX/Revenue, %0.574%0.950%0.621%0.570%0.612%
Net Debt/EBITDA8.0x2.8x1.3x0.4x0.6x
ROIC, %1.0%7.8%14.9%22.3%22.8%
ROE, %-0.6%7.0%13.4%20.3%20.6%

Profitability and return on investment

Margin expansion supported EBITDA growth. The company's EBITDA margin increased slightly on 0.100 pp from 5.50% to 5.60% in FY2016. In the last 3 years the company's EBITDA margin surged on 3 pp from 2.60% in FY2013 to 5.60% in FY2016.

Servoca shows attractive ROIC at 22.8% for the last 12 months which assumes stable development model. Three years ago it was considerably lower at 7.84%. Average ROIC for the last three years was 20.0%.

The company showed small growth in Net Income margin of 0.100 pp from 3.80% to 3.90% in FY2016. In the last 3 years Servoca's Net Income margin surged on 2.60 pp from 1.30% in FY2013 to 3.90% in FY2016.

Servoca operates at ROE of 20.6%. Average ROE for the last three years was 18.1%.

Capital expenditures (CAPEX)

Servoca's CAPEX/Revenue was 0.612% in FY2016. Servoca's CAPEX/Revenue dropped on 0.337 pp from 0.950% in FY2013 to 0.612% in FY2016. It's average level of CAPEX/Revenue for the last three years was 0.601%.

Leverage (Debt)

The company has low debt level at 0.6x Net Debt/EBITDA - at the same time with high growth. In the last 3 years Servoca's leverage dropped on 2.18x from 2.81x in FY2013 to 0.62x in FY2016.

Peers in Support Services

Below we provide Servoca benchmarking against other companies in Support Services industry for the last 5 years. We show data for the top-5 companies by key financial metric together with the median value for all the companies in the industry.

Top companies by Revenue growth, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Camco Clean Energy ($CCE)88.0%-54.7%99.4%
Optimal Payments ($OPAY)39.9%41.5%44.0%68.1%
Inspired Energy ($INSE)83.8%44.8%42.2%40.2%
21St Century Technology ($C21)0.1%-22.8%-16.6%35.5%
Ibex Global Solutions ($IBEX)35.7%30.0%29.8%7.0%
Median (55 companies)4.6%8.0%4.7%6.6%1.5%
Servoca ($SVCA)1.3%13.8%20.0%17.8%

Top companies by Gross margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Inspired Energy ($INSE)94.6%86.8%78.7%76.2%
Ienergizer Ltd ($IBPO)56.2%78.4%76.8%72.7%71.3%
Grafenia ($GRA)53.4%54.3%56.1%70.8%66.3%
Vianet Group ($VNET)53.3%51.3%58.8%69.2%70.1%
Prime People ($PRP)63.4%58.3%57.7%61.4%59.2%
Median (49 companies)29.5%28.8%30.4%28.4%27.3%
Servoca ($SVCA)28.2%28.5%29.0%28.7%26.9%

Top companies by EBITDA margin, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
21St Century Technology ($C21)13.4%-0.2%36.0%44.8%
Northgate ($67GX)41.2%40.4%40.6%39.4%38.3%
Inspired Energy ($INSE)46.2%48.5%1.5%35.4%
Vianet Group ($VNET)18.6%17.3%19.7%27.1%22.1%
Vp ($VP.)23.9%24.5%24.2%26.2%28.4%
Median (55 companies)6.8%6.4%6.9%7.6%7.5%
Servoca ($SVCA)1.0%2.6%4.2%5.5%5.6%

Top companies by CAPEX/Revenue, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Vp ($VP.)21.4%17.7%21.6%25.7%24.1%
Sagentia Group ($SAG)1.9%1.4%1.5%25.2%
Nature Group ($NGR)14.3%7.2%5.6%22.9%
Augean ($AUG)9.8%15.9%12.3%12.3%
Falkland Islands Hldgs ($FKL)3.7%6.8%12.9%11.9%4.8%
Median (55 companies)1.1%1.1%1.1%1.1%1.1%
Servoca ($SVCA)0.6%0.9%0.6%0.6%0.6%

Top companies by ROIC, %

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
21St Century Technology ($C21)20.3%-2.9%45.6%111.0%
Inspired Energy ($INSE)63.9%65.5%-7.5%28.0%
Petards Group ($PEG)35.5%-78.0%24.7%23.9%
Rtc Group ($RTC)14.6%17.6%19.9%22.2%
Mortice Ltd ($MORT)32.2%29.2%19.6%21.9%
Median (55 companies)9.9%7.9%9.3%10.2%9.4%
Servoca ($SVCA)1.0%7.8%14.9%22.3%22.8%

Top companies by Net Debt / EBITDA

 FY2012 FY2013 FY2014 FY2015 FY2016
Top 5
Redhall Group ($RHL)22.8x5.8x6.6x16.8x16.2x
Mitsubishi Corp ($MBC)9.9x15.9x14.3x12.5x25.0x
Ienergizer Ltd ($IBPO)6.3x2.8x3.0x4.0x2.4x
Ceps ($CEPS)3.0x6.6x3.8x
Kellan Group(The ($KLN)6.5x3.6x
Median (51 companies)0.8x0.5x0.6x0.4x0.3x
Servoca ($SVCA)8.0x2.8x1.3x0.4x0.6x