RM shares rally on annual performance ahead of expectations

IT services and resources supplier to the education sector, RM (LON:RM), watched its shares spike on an optimistic full-year of trading.

The company’s Board said it expects trading for the period ended 30 November 2020 to be ahead of previous expectations. It added that improved trends in trading during Q3 continued during Q4, as UK education establishments remained open during the second round of regional and national lockdowns.

RM did note that the pandemic had disrupted some new business development, but said that despite this, it had secured new contracts to deliver end-to-end digital assessments and school cloud solutions.

Its announcement finished by saying that its year-end debt position is expected to be below £5 million, from from £15 million at year-end 2019. Its preliminary results for the full year ended 30 November 2020 are set to be published in early February 2021.

Speaking on the current trading environment and expectations going forwards, Group Chief Executive, David Brooks, said: “We expect the current uncertainty to continue into 2021, with the short-term impact of COVID-19 on education buying patterns and the level of schools exams to be taken, continuing to be difficult to predict.”

“However, the increased focus on ensuring education systems can deliver through the pandemic, the resilience RM has shown in 2020 and the longer-term shift to digital enablement in education, means RM remains well placed to make progress.”

Following the update, RM shares rallied by 15.05%, up to 237.00p. This price is some 14% behind its post-lockdown high of 268p, and 21.27% short of analysts’ target price of 285p a share.

Analysts currently have a consensus ‘Buy’ rating on the stock, while the Marketbeat community offers a 68.64% ‘Outperform’ stance. The group’s p/e ratio of 10.42 is good value versus the computer and tech sector average of 75.57. Its dividend yield is generous at 6.32%.