NEXTEQ PLC EARNINGS GROWTH DRIVES RECOVERY

Ticker: NXQ

Price change since beginning of 2024: +39.26%

12- Month price change: -13.31%

INTRODUCTION

UK penny stock are one of the more volatile and interesting segments of the stock markets. Potentially interesting, from this segment of the stock market, is Nexteq PLC (NXQ). Nexteq PLC (NXQ) is a technology partner to various global industrial manufacturers. The company focuses on two key segments, with one segment focusing on designing and engineering gaming computers, software systems and accessories for the betting industry. The second segment focuses on developing and producing human machine interface hardware from global industrial markets, with a particular focus on the broadcast and medical sectors. The company’s recent earnings surge has driven solid price returns since the beginning of the year, after the company underwent a patchy period in terms of price action last year. 

STRONG EARNINGS GROWTH EXPECTED TO CONTINUE INTO 2024

According to the company’s financial statements, Nexteq (NXQ) has seen sharp revenue and earnings growth since 2021. The company has increased revenue has grown 46% while net income increased by about 242%. The company has noted strong demand in both the broadcast and growth sectors, while the company also noted that there was a sharp improvement due to an improved product mix. The company also indicated effective cost cutting in its gaming platform segment, while also highlighting they expect a strong year in 2024, forecasting improved margins and further global growth.

RECOVERY IS ON TRACK AFTER KEY CHANGES AT THE COMPANY

Nexteq (NXQ) has seen positive price action year-to-date with the company seeing its share price rise by around 39%. The continued recovery appears to be driven by the company’s ability to maintain and improve operating margins, while exhibiting growth of its core business segments. The company business already covers North America, Europe and Asia, which indicates the company’s ability to run its operations at scale, while also capitalizing on various markets globally. 

WHAT THIS RECOVERY COULD SIGNAL FOR THE FUTURE

Nexteq’s (NXQ) recovery has shown that despite a turbulent 2023, the company continues to remain resilient and committed to its core competencies. The company has shown that despite the recent negative market perception, the company has the ability to continue growth and further improve efficiencies without compromising margins. Strong earnings, a healthy operating margin, with the prospect of improvement, could indicate that the company has found a feasible path to long term growth. With prices still trading well below its all-time high of 486 GBX, the recent positive change may still not have been priced in adequately. If the company succeeds in recovering to its all-time high, this could indicate a return potential of around 224%. These factors could make Nexteq’s (NXQ) shares one of the more interesting UK penny shares.