Electrocomponents Serves Up Raspberry Pi Delight

Published in Investing on 13 July 2012

The Raspberry Pi distributor provides a solid trading update.

Shares in Electrocomponents (LSE: ECM) climbed almost 3% this morning following an encouraging trading update. At the current share price of 200p, the shares are valued at 10 times forward earnings.

The company, which operates under the RS Components and Allied Electronics banners in the UK and the US respectively, said UK sales grew 5% -- of which 2% was accounted for by the revolutionary Raspberry Pi.

The Raspberry Pi is a low-cost, credit card-sized, single-board computer designed and developed by the Raspberry Pi Foundation. It also includes an ARM Holdings (LSE: ARM) 700MHz processor. The Raspberry Pi charity was established to promote the development of computer development skills in education across the world.

Electrocomponents said: "Sales are at a similar level to last year despite strong comparators and a challenging economic environment. We are mindful of the macroeconomic environment and, as we have demonstrated in previous years, we are able to respond quickly to changing conditions."

The company added: "We are well positioned compared to the numerous, smaller distributors against whom we primarily compete, who do not have the advantage of our global scale and reach. We are therefore continuing to invest in our strategic priorities to leverage these advantages."

Income investors should be reassured by Electrocomponents' heartening first-quarter numbers. The prospective 6% yield, which is expected to be covered 1.5 times by forward earnings, looks intact for 2013.

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> David does not own shares in any of the companies mentioned.

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LastChip 13 Jul 2012 , 4:39pm

Great solid company. I've owned these for years and they've paid me back over and over again.

They've got probably the best free design software for engineers anywhere in the world (DesignSpark) and a catalogue of products so vast, that it's difficult for anyone else to compete.

Love 'em!

MrFandango 16 Jul 2012 , 3:57pm

I had to wait 6 months to get my hands on a Raspberry Pi! (was on the RS Components waiting list all that time)

Having great fun with it though (I'm a sad man, I know...). ;-)

I realised that I don't have any electronics or components companies in my portfolio. Too late to get into ARM now I should think. That share's fully priced now.

MrFandango 16 Jul 2012 , 4:00pm

EDIT - d'oh, I got confused with IMG, not ARM.

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