Computershare has reported solid first-half results with earnings per share up 3.9%, prompting an upgrade to full-year guidance and a notable dividend increase.
- Management EPS rises 3.9% in 1H26
- Revenue growth of 3.9%, excluding margin income up 7.2%
- EBIT margin improves to 16%, moving towards 20% target
- Debt leverage reduced to 0.3x, strengthening balance sheet
- Interim dividend increased 22.2% to 55 cents per share
Strong First Half Performance
Computershare has delivered a steady performance in the first half of fiscal 2026, with management earnings per share (EPS) rising 3.9% compared to the previous corresponding period. Revenue growth mirrored this increase at 3.9%, while excluding margin income, revenue climbed a more robust 7.2%. The company’s operating earnings before interest and tax (EBIT) excluding margin income surged 12%, reflecting improved operational efficiency and cost control.
Margin Expansion and Strategic Progress
The EBIT margin excluding margin income reached 16%, a meaningful step towards the company’s 20% margin target. This improvement was achieved despite inflationary pressures, as business-as-usual operating costs rose at a rate below inflation. Computershare’s three core business lines; Issuer Services, Corporate Trust, and Employee Share Plans; all contributed to the growth, with client fees up approximately 5%, underscoring the recurring nature of the revenue base.
Navigating Interest Rate Challenges
Margin income, which is sensitive to interest rates, declined by 5.4% to $372.9 million due to a sharp fall in US cash rates. However, the company’s natural hedge and hedging strategies limited the impact, while lower interest rates stimulated higher business activity and client balances. This dynamic helped offset some of the margin income pressure and contributed positively to profit before tax.
Balance Sheet Strength and Shareholder Returns
Computershare’s capital-light business model continues to generate consistent cash flow, enabling the company to reduce debt leverage to a conservative 0.3 times. This financial strength supports ongoing investments in technology, selective acquisitions, and enhanced shareholder returns. Reflecting confidence in the outlook, the board has increased the interim dividend by 22.2% to 55 Australian cents per share, a move that balances rewarding shareholders with maintaining financial flexibility.
Upgraded Full-Year Outlook
Buoyed by the first-half momentum and a positive pipeline, Computershare has upgraded its full-year management EPS guidance from around 140 cents to approximately 144 cents, representing a 6% increase year-on-year. The company cites lower interest costs, the benefits of last year’s share buyback, and ongoing strategic execution as key drivers of this improved outlook. With corporate actions and employee share plan activities recovering, particularly in markets like Hong Kong and Australia, Computershare appears well positioned to sustain growth.
Bottom Line?
Computershare’s upgraded guidance and dividend hike signal confidence, but interest rate volatility remains a watchpoint.
Questions in the middle?
- How will further interest rate fluctuations impact margin income in the second half?
- What acquisition targets is Computershare considering to bolster growth?
- Can the company sustain margin expansion towards its 20% EBIT target amid inflation?