Nvidia (NASDAQ:NVDA) shares stay tremendous widespread with UK traders. I’ve received my eye on one thing slightly nearer to residence, nonetheless.
Extra particularly, I’m eyeing up a FTSE 250 tech share which — like Nvidia — has an excellent observe report of beating market estimates.
Its shares are up 81% over the previous 5 years, and 543% over the past decade. And I feel it has a lot additional to go because the digital revolution rolls on.
I’m speaking about Softcat (LSE:SCT), a share that’s simply revealed extra blockbuster buying and selling numbers. Its shares had been final up 13% on Thursday (24 October).
Forecasts crushed once more
Softcat gives a spread of tech companies, and is an skilled in fields together with cloud computing, IT infrastructure, networking, and cyber safety.
Outcomes in the present day confirmed gross invoiced earnings up 11.3% within the 12 months to July, at £2.85bn. This drove working revenue 9.3% larger, to £154.1m and barely forward of Metropolis estimates.
Gross revenue was up 11.7% 12 months on 12 months at £417.8m.
New information
Softcat mentioned its report end result mirrored “additional improvement of our expertise and repair proposition as we proceed to scale, making it simpler for patrons and distributors to do enterprise“. It additionally mentioned final 12 months’s numbers “[reflected] business traits together with knowledge and AI“.
The enterprise is successfully rising its worker base to capitalise on such alternatives, as these outcomes present. Its headcount rose 14.3% over the course of the final 12 months.
Lastly, Softcat mentioned its money conversion had picked as much as 95.9% from 93.2% in monetary 2023.
This prompted it to lift the annual dividend 6.4%, to 26.6p. It additionally elevated the particular dividend 12 months on 12 months, to twenty.9p.
Shiny outlook
Trying forward, Softcat mentioned that “we count on to ship one other 12 months of double-digit gross revenue development along with excessive single-digit working revenue development“.
I’m not shocked by the agency’s bullishness. It’s confirmed adept at rising gross sales with present clients, alongside including new shoppers to its books.
As a possible investor, I’m additionally inspired by its distinctive money technology and powerful steadiness sheet. This provides it scope to proceed investing in growth to capitalise on its rising markets.
What about Nvidia?
Now don’t get me incorrect. Nvidia nonetheless stays one of many hottest development shares for my part.
It’s not only a nice play on the synthetic intelligence (AI) revolution. Gross sales of its graphic processing items (GPUs) may take off because the metaverse, quantum computing, gaming, and knowledge centre segments develop.
Nonetheless, the chipmaker additionally faces important threats, like potential provide chain issues, an financial slowdown, rising competitors, and rising commerce tensions between the US and China.
But these threats aren’t factored into Nvidia’s share value, for my part. At the moment it trades on a sky-high ahead price-to-earnings (P/E) ratio of fifty.8 instances.
Softcat can also be susceptible to the financial panorama and growing competitors. It is usually extra depending on the low-growth British financial system to drive revenues.
Nonetheless, I feel its valuation is way extra cheap in mild of those risks. Certainly, its potential P/E a number of is significantly decrease than Nvidia’s, at 26.7 instances.
In actual fact, given its lengthy report of sturdy, forecast-beating earnings, I feel Softcat shares could possibly be a discount for my portfolio. If I had cash to spend in the present day on a tech share, Softcat could be on the high of my record.
