Ava Risk Group Share Price Up 25% on Earnings Forecast (ASX:AVA)

With the new financial year well under way, earnings season is upon us.

And this year, compared to most, could be a rocky affair. Time will tell just how much damage the ‘rona has done.

However, for some companies, 2020 hasn’t been that bad at all.

One such example is Ava Risk Group Ltd [ASX:AVA]. A small-cap which specialises in security as well as risk management products and services.

And as it turns out, the tail end of the previous financial year went better than expected. News of which has seen the AVA share price climb 25% in trading today.

Making up lost ground

Ava has reported that revenue for the last quarter will now come in at $12.3 million.

That’s $1.8 million more than previously thought. A sign that the company is in a far better spot than they initially believed.

Better still, this increased revenue is expected to translate into increased earnings too. With Ava forecasting an EBITDA of $6.8 million. Also up $1.8 million from the initial prediction.

The reason for this pleasing result was largely due to Ava’s service division. An arm that has faced challenged due to COVID-19 — but has also thrived.

That certainly won’t come as a huge surprise, given their services revolve around logistics of high-value assets. That includes collection, delivery, storage freight, and customs duties for said assets.

Now, more than ever, they are seeing strong demand for these services. With more customers, at better margins, delivering more revenue.

However, it’s not all good news for Ava.

In contrast to the services boom, their technology division has struggled.

Roughly $2.5 million worth of orders have been delayed. With some of their employees even forced to work less hours for less pay due to travel restrictions. Infringing on their ability to commission new security systems and maintain old ones.

Thankfully though, in time these issues should be resolved. With one key project — for the Indian Ministry of Defence — now back on track as of last month.

So, with a bit of luck, 2020 could end up being a big year for Ava. Because once both sides of the business are up and running, they can start firing on all cylinders.

New future, new leadership

The other big news for Ava is the resignation of their CEO, Scott Basham.

Despite leading the company to this impressive result, Basham will step down. Making way for fellow executive Rob Broomfield to step up to the plate.

A move that will hopefully deliver even better results for Ava moving forward.

For today though, at the very least things are looking bright. Giving Ava and Broomfield the chance to grow into something much bigger.

And if you’re looking for other small-caps with big potential, then we’ve got you covered.

Our newest report — ‘Four High Value Small-Caps That Could Go Exponential’is the perfect place to start. A detailed look at several ASX-listed companies that are worth checking out.

Get your copy of the full report, as well as the names of the four stocks in question, right here.

Regards,

Ryan Clarkson-Ledward,
For Money Morning


Ryan Clarkson-Ledward is one of Money Morning’s analysts.

Ryan holds degrees in both communication and international business. He helps bring Money Morning readers the latest market updates, both locally and abroad. Ryan tackles all the issues investors need to know about that the mainstream media neglects.

Ryan’s primary focus is assisting Sam Volkering with background research and insight for readers by dissecting the latest events affecting the world. Working closely with Sam, they explore the latest in small-cap and technology stocks as well as cryptocurrency opportunities.

You can find Ryan’s contributing research, developments, and supporting information across several e-letters, including:


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