M2 Telecommunications (MTU.AX) delivered strong results across their businesses in 2009-2010. With underlying EPS up 72% to 16.7cents on the back of the People Telecom acquisition and organic growth. 2011 forecasts were strong with underlying EPS targeted in the 20.7-22c range.
With the current price of $1.80 you’re buying earnings growth of 28% for a P/E multiple of 8.4, which is an appropriate multiple for a no-growth company. In others words, current buyers are getting all M2’s growth for free. Alternatively the market believes M2 is not going to grow in the future …

M2 announced today higher than expected 2011 forecast.
According to the guidance M2 expects substantial growth since the last financial year.

Revenue is forecast to grow by 12 per cent in 2010-11 to between $425 million and $445 million from the forecast $380 million to $400 million in 2009-10.
Net profit is expected to explode 52 per cent to $22 million and $23.5 million in financial 2011 from the 2009-10 guidance figure of about $15 million.
Earnings per share is forecast to rise 36 per cent to between 18.1 cents and 19.4 cents from …

M2 Telecommunications (MTU) reported outstanding first half 2010 results today. Though not quite as outstanding as the headline on the release trumpets “M2 delivers record earnings – up 156%“. Still Vaughan Bowen and company have got a lot to be pleased by, with earnings per share up 86% and EPS adjusted for non-cash amortisation up 118%. Excellent stuff Vaughan, keep up the fantastic work.
Growth was driven by last years two major acquisition, People Telecom and Commander. Regular reader may recall I generally have concerns with growth by acquisition. In this case I have nothing but praise for …

When is price the same as value?

M2 Telecommunications have soared since I first mentioned them in this post in July Getting Down From My Pulpit. It’s a shame I didn’t get down from my pulpit, analyse and buy M2 sooner than September M2 Telecommunications Analysis and Valuation.
I shan’t complain. I own an attractive well managed company with recurring revenues which still appears undervalued. Pipe Network’s buyout has buoyed the sector and propelled M2 to new highs. Those taking a closer look at the telecommunications sector should see the value in M2. Speaking of Pipe, I was mentioned in …

Intersuisse highlighted M2 Telecommunications Group (MTU) as one of their preferred stocks in their list of stocks under $1bn with estimated current year P/E under 14.0 times and expected yield over 5%.
ROE – 26.7%
Forward Dividend Yield – 6.7%
Fwrd P/E – 10.1
Lance Spicer also reportedly tipped MTU is his newsletter yesterday.
MTU jumped 7.7% Wednesday to $1.54 on high volume of 404,514.
Disclosure: Long MTU

After my intial analysis of the three growth Telcos I decided to dig deeper into M2 Telecommunications and am now a part owner.
From the Horses Mouth: The MD Vaughan Bowen kindly replied to my email about his share sales and difference between NPAT and EPS FY10 forecasts. I’ll publish his reply, despite the second point being a tad embarrassing for me.

Today I’m going to do a first pass on three growth Telcos; M2 Telecommunications Group Limited (ASX:MTU), Pipe Networks Limited (ASX:PWK) and iiNet Limited (ASX:IIN). Two of them rank in the top ten Austalian Telcos the third’s growth could put in that group within a couple years.

Why these three?
- Hunter Hall disclosed a large position in MTU back in April, topped up in May and again in June taking their holding to 12.3%.
- A telco lawyer friend mentioned Pipe Networks to me when the price was around $1.80, I hoping it’s better late than never.
- iiNet is my ISP so I’ll call this a Lynchian idea.