2 hot value shares with the potential to boost your retirement fund

Fast-growing telecommunications and IT services provider AdEPT Telecom(LSE: ADT) this morning delivered full-year results for the trading year to 31 March.

Good figures

Shareholders here will be looking for a continuation of the organic- and acquisition-fuelled growth that produced a string of double-digit percentage increases in earnings per share (EPS) over several years, driving the share price from 20p during 2011 to 320p today. The figures don't disappoint.

Highlights include revenue up 19.2% compared to a year ago and adjusted EPS shooting 20.3% higher. The directors crowned the year's achievements by bunging an extra 19.2% into the total dividend for the year. So far, so good.

Acquisitions and debt

The firm bagged three acquisitions during the period in Comms Group UK, CAT Communications and OurIT Department, but one negative consequence of this activity is that year-end net debt ballooned by 158% to £15.5m. The company agreed on a new five-year £30m revolving credit facility with Barclays and Royal Bank of Scotland, which is a level of borrowings that represents around seven times this year's figure for operating profit if it's all drawn down. That's on the high side and I reckon Adept Telecom is raising the stakes when it comes to hunting for further growth.

However, the firm's record on cash inflow is good and I think the business is showing signs that it has defensive qualities, which could support higher levels of debt. Nonetheless, I'd be inclined to keep a close eye on borrowings from here.

Undemanding valuation

City analysts following the firm expect earnings to rise 5% for the year to March 2018, which is a slower rate of growth than we've become used to, but the valuation looks undemanding. The forward price-to-earnings ratio runs just below 13 and the forward dividend yield sits at 2.5% with the payout covered just over three times by anticipated earnings.

Meanwhile, large-cap engineering support services company Babcock International Group(LSE: BAB) updated the market today on trading from 1 April onwards.

The firm supports the defence, energy, emergency services, transport and education sectors and said the financial year started well. Trading has been in line with the directors' expectations and the outlook for the year is unchanged. To put that in perspective, with the full-year results on 24 May, the directors said they were confident of achieving mid-single-digit organic revenue growth at constant exchange rates. They also said margins would remain broadly for the year and over the medium term. City analysts expect earnings to lift 4% for the year to March 2018 and 9% the year after that.

Bearing down on debt

To give you a flavour of the firm's operations, one recent contract win is a £500m order to operate a fleet of specialist fixed-wing aircraft for the Norwegian Health Service from summer 2019. Another is a Ministry of Defence programme to support the Royal Navy's new Queen Elizabeth Class Aircraft Carriers and Type 45 Destroyers, worth around £360m over seven years.

Encouragingly, Babcock is moving the opposite way from AdEPT when it comes to debt, expecting to reduce borrowings during the second half of 2017/18. At today's 866p share price, you can pick up some of the shares on a modest forward P/E rating of 9.5 and a forward dividend yield of 3.7%.

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Kevin Godbold has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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