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CALGARY, Alberta - Computer Modelling Group Ltd. (TSX:CMG), a global software and consulting company, reported a 47% increase in total revenue for the first quarter of fiscal 2025, reaching $30.5 million, up from $20.7 million in the prior year's quarter. The revenue growth was attributed to the acquisition of Bluware (BHV), which contributed 35% to the increase, and a 12% rise within CMG's own operations.
Despite the revenue uptick, the company saw a significant decrease in net income and earnings per share. Net income for the quarter fell to $4.0 million, a 43% drop from the $6.9 million reported in the same quarter of the previous fiscal year. Earnings per share followed suit, decreasing by 44% to $0.05.
The decline in profitability was largely due to a rise in stock-based compensation expenses, driven by an increase in share price, and a decrease in free cash flow per share by 22%, primarily due to BHV generating negative cash flows.
Operating profit also experienced a downturn, decreasing by 42% to $5.7 million, compared to the same period last year. Adjusted EBITDA Margin stood at 31%, a significant fall from the 48% reported in the prior year. The CMG operating segment saw its Adjusted EBITDA Margin dip to 42% from 48%, mainly owing to higher operating expenses, including increased compensation and headcount to support growth.
The Board of Directors has approved a cash dividend of $0.05 per Common Share for the quarter, with a payment date of September 13, 2024, to shareholders of record as of September 5, 2024. The dividend announcement comes amid the company's efforts to navigate the challenges posed by the acquisition of BHV, which is currently operating at lower margins than CMG.
The company's cash balance as of June 30, 2024, was reported at $69.1 million. CMG Group continues to focus on its growth strategy, including the restructuring of its sales organization, which now sees regional sales directors reporting to Dave Montana, VP Global Sales, who joined the company on May 28, 2024.
This news article is based on a press release statement from Computer Modelling Group Ltd. and aims to present the key financial outcomes and corporate decisions of the company without bias or promotional language.
In other recent news, Chipotle Mexican Grill (NYSE:CMG) has seen a series of adjustments in its stock outlook following its second-quarter 2024 performance. Truist Securities reduced its price target from $74 to $69, maintaining a Buy rating, despite the company surpassing expectations for same-store sales and earnings per share. Loop Capital also lowered its price target from $58 to $53, while retaining a Hold rating, in response to Chipotle's earnings report.
Piper Sandler adjusted its price target for Chipotle to $56 from $61, keeping a Neutral rating due to concerns about a slowdown in same-store sales growth. Similarly, Stephens reduced its price target from $64 to $61, maintaining an Equal Weight rating, citing potential margin pressures. TD Cowen adjusted its price target from $72 to $65, keeping a Buy rating, and highlighted Chipotle's efforts to standardize portion sizes.
These changes in stock outlook come after Chipotle reported an 18% increase in sales, reaching nearly $3 billion and launching 53 new outlets as part of its expansion strategy. These are recent developments in the financial landscape for Chipotle, which continues to demonstrate resilience and growth potential in its operations.
InvestingPro Insights
Computer Modelling Group Ltd. (CMG) has shown a robust revenue increase in the first quarter of fiscal 2025, underpinned by strategic acquisitions and organic growth. However, the company's financial health and market valuation, as reflected by real-time data from InvestingPro, present a more nuanced picture. With a market capitalization of $73.31 billion, CMG is a significant player in its sector. The company's Price-to-Earnings (P/E) ratio stands at 52.14, suggesting a high valuation relative to current earnings, which is further supported by a P/E ratio of 51.38 over the last twelve months as of Q2 2024.
InvestingPro Tips indicate that CMG is trading at a high earnings multiple and a high P/E ratio relative to near-term earnings growth. This is reflected in the PEG ratio of 1.99, which combines the P/E ratio with the expected earnings growth rate, indicating that the stock may be overvalued given the growth estimates.
Moreover, the Price to Book (P/B) ratio of 19.79 reinforces the view that the market is pricing CMG at a premium. Despite the recent performance concerns, analysts remain optimistic about the company's profitability this year, and CMG has been profitable over the last twelve months, with a return on assets of 17.12%. These metrics are critical for investors considering the company's future prospects and valuation.
For those interested in a deeper analysis, there are additional InvestingPro Tips available, which provide insights into the company's financial health, such as its ability to cover interest payments with cash flows and its liquid assets exceeding short-term obligations. These additional tips can be found on the InvestingPro platform and can offer valuable guidance for investors looking to make informed decisions about CMG's stock.
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