Software giant Aveva (LSE:AVV) has reported strong year-end 2020 results showing profit growth of 22% while leaving its final dividend of 29p unchanged.
Aveva’s market-leading anti-virus software Avast and its associated VPN, have been downloaded 435 million times.
More than 45% of FTSE companies reduced or stopped dividends entirely in the wake of the coronavirus-induced economic stop, so this news will be a boost to investors.
The FTSE 100 company revealed it would spend £60m less than planned this year, without cutting jobs or taking government loans.
Across the 12 month period pre-tax profits rose from £175.4m to £213.8m, with revenue up 8.8% to £833.8m.
Aveva has been a slow-and-steady investor’s dream for some time. Despite its high P/E ratio of 44 times earnings, and a limited dividend yield of 1.03%, it has no debt and cash of £114.6m to play with. It was promoted from the FTSE 250 to the UK’s top 100 companies by market cap alongside sports fashion empire JD Sports (LSE:JDS) in June 2019.
CEO Craig Hayman noted how recurring revenue from multi-year contracts put Aveva in “a strong position” with the company “well-placed to navigate through the challenges of the current environment”.
While the Aveva share price has clawed back some of its value, rising 41% since the March bottom, the FTSE 100 firm has not returned back to where it was pre-crash. This report could be the catalyst to put it back on top.
Aveva shares were up nearly 4% to 4,178p in early Monday trading.
I believe there remains significant upside potential for investors who like their growth a little less volatile and a little more predictable.
Recurring revenue growth is key to this.
With the UK economy now looking towards reopening, investors have been betting on recovery plays like leading drinks brand owner C&C Group (LSE:CCR). In recent days value investors who loaded up on historically cheap FTSE 100 firms have been rewarded, for example with oil and gas supermajor Royal Dutch Shell (LSE:RDSB) and insurance behemoths Legal & General (LSE:LGEN) and Aviva (LSE:AV) — two strong candidates for recovery we picked as a top tips back in March.
The pharma minnow Covid-19 test bubble appears to have burst, and all investor eyes are now focused firmly beyond the effects of the pandemic.
The FTSE 100 has regained 29% of its value since the coronavirus crash low of 4,993 on Monday 23 March.