M2 Telecommunications are firing on all cylinders and with both the NBN most likely to assist their profitability and further clever acquisitions their future looks bright.

Peter Lynch and then Warren Buffett famously said,  buy into a business that’s doing so well an idiot could run it, because sooner or later, one will. That quote is often incorrectly taken to imply that management doesn’t matter. Anyone reading Buffett’s latest annual letter to shareholders should be left with no doubt that management is vitally important to Buffett. He views the integrity and talent of his executives as one of the keys to his success.
That brings me to Vaughn Bowen and team at M2 Telecommunications (MTU.AX). M2 is the leader in network independent telecommunications in …

The Fusion Superannuation Fund is up 14% year to date, thanks in the main to strong performance by M2 Telecommunications and Biota. I have been increasing the funds cash position and now hold 12.4% in cash. Cash is an attractive option in Australia where safe 6% returns are easily available. The sales have predominately been in banks, ANZ was first out the door followed by Westpac.

I attended the M2 Telecommunications AGM yesterday afternoon. I had a couple questions to ask, but before I could Vaughan Bowen addressed them all in his CEO presentation.  M2 well positioned for the NBN roll-out, with an organisation built around the low margins of a re-seller. Speaking of margins Bowen reaffirmed guidance and made it clear they would enjoy margin expansion this year. While that was obvious from their guidance of earnings expanding faster than revenue, it was good to hear that their focus is on profitability. I think that is a distinction that many CEOs …

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