Nvidia (NASDAQ:NVDA) shares stay tremendous fashionable with UK buyers. I’ve acquired my eye on one thing a bit of nearer to residence, nevertheless.
Extra particularly, I’m eyeing up a FTSE 250 tech share which — like Nvidia — has a superb observe file 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 have been final up 13% on Thursday (24 October).
Forecasts overwhelmed once more
Softcat gives a variety of tech companies, and is an skilled in fields together with cloud computing, IT infrastructure, networking, and cyber safety.
Outcomes immediately 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% yr on yr at £417.8m.
New data
Softcat stated its file end result mirrored “additional improvement of our expertise and repair proposition as we proceed to scale, making it simpler for purchasers and distributors to do enterprise“. It additionally stated final yr’s numbers “[reflected] business developments together with information 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 yr.
Lastly, Softcat stated 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 yr on yr, to twenty.9p.
Vivid outlook
Wanting forward, Softcat stated that “we anticipate to ship one other yr 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 prospects, alongside including new purchasers to its books.
As a possible investor, I’m additionally inspired by its distinctive money era and powerful steadiness sheet. This offers it scope to proceed investing in growth to capitalise on its rising markets.
What about Nvidia?
Now don’t get me fallacious. Nvidia nonetheless stays one of many hottest development shares in my view.
It’s not only a nice play on the substitute intelligence (AI) revolution. Gross sales of its graphic processing items (GPUs) may take off because the metaverse, quantum computing, gaming, and information centre segments develop.
Nevertheless, the chipmaker additionally faces vital 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, in my view. At present it trades on a sky-high ahead price-to-earnings (P/E) ratio of fifty.8 occasions.
Softcat can be susceptible to the financial panorama and rising competitors. It’s also extra depending on the low-growth British economic system to drive revenues.
Nevertheless, I feel its valuation is much extra cheap in gentle of those risks. Certainly, its potential P/E a number of is significantly decrease than Nvidia’s, at 26.7 occasions.
In actual fact, given its lengthy file of robust, forecast-beating earnings, I feel Softcat shares might be a cut price for my portfolio. If I had cash to spend immediately on a tech share, Softcat can be on the prime of my record.
