Admiral Group: Looking To Ensure Positive Reaction From Earnings
Connor Campbell | Aug 09, 2017 11:26
By Connor Campbell, Financial Analyst, Spreadex
Stock of the day: Admiral Group PLC
Can Admiral Group (LON:ADML) insure (boom tish) a positive reaction following next Wednesday’s interim statement?
The first few months of the year were fairly rocky for Admiral. At the end of February it announced it was pushing its full year results back as it had to assess the impact of changes made to the Ogden rate – i.e. the discount rate used by UK courts to calculate personal injury damages awards – before updating investors. Understandably the markets weren’t too impressed with this development, sending the stock as much as 9% lower before settling at a more reasonable 2.7% decline.
Cut to a week later and Admiral actually managed to recover those losses, and then some, with its annual report. Though those Odgen rate issues caused a £105 million hit to the company’s pre-tax profit – taking Admiral from a pre-shift 3% rise to a post-change 25% fall to £284.3 million – the fact that it maintained its 114.4p full year dividend reassured investors, who sent the stock 5% higher in the space of 48 hours.
From that point onwards things quickly picked up for the insurer. In mid-March some generic bid speculation caused the stock to cross the £20 mark, before a steady rise in April and a sharp increase at the start of May pushed Admiral above £21 for the first time since the previous August.
Going ex-dividend on May 11th then set the stock back, and left it bouncing between £20 and £20.50 all the way until early August (with a brief foray to £21 in mid-June). However, an article in Forbes highlighting the stock as one to watch after the Association of British Insurers revealed UK motor insurance hit a record high in Q2 2017 kick-started another round of gains, causing Admiral to hit an effective 12 month peak of £21.80 on Monday. It now sits at a current trading price of £21.54
In terms of next week’s interim results, Admiral is expected to more than double its revenue, from £259.7 million to £553 million year-on-year, with a slight 2.4% increase in earnings to 57.16p per share.
Admiral Group PLC has a consensus rating of ‘Hold’ alongside an average target price of £18.65.
Get The App
Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved. In relation to fixed odds, Spreadex Ltd is licensed and regulated by the Gambling Commission under licence number.
Original post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.