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On Wednesday we had a trading statement from education group AdvTech. Trading statements have been horrible news on the JSE this year, so I braced myself when I started reading the statement.
It was pleasantly surprising to see that the company is expecting headline earnings per share to increase between 25% and 35% to 42c-45c from 34.8c this time last year. This number did include an insurance payout from that fraud case and a few other tailwinds. If you exclude those, earnings will grow between 5% and 9%. That is still better than most SA inc stocks. But like the rest, the share price has taken some heat.
If you annualise that number, let's go with 86c for the year, the stock trades at 13 times earnings. That sounds about right for a company operating in a tough environment but with huge upside potential. We are still buyers of this stock.