Current Status: BUY

 
 

Notes:

  • 13 February 2023

    • First half 2023 results:

      • EPS: AU$0.19 (up from AU$0.07 in 1H 2022).

      • Revenue: AU$4.28b (up 6.7% from 1H 2022).

      • Net income: AU$468.0m (up 172% from 1H 2022).

      • Profit margin: 11% (up from 4.3% in 1H 2022).

      • Notable:

        • Over the last 3 years on average, earnings per share has increased by 9% per year but the company’s share price has fallen by 10% per year, which means it is significantly lagging earnings.

  • 20 October 2022

    • The consensus outlook for 2023 has been updated:

      • 2023 EPS estimate increased from AU$0.31 to AU$0.37.

      • Revenue forecast unchanged at AU$8.36b.

      • Net income forecast to grow 167% next year vs 101% growth forecast for Insurance industry in Australia.

      • Consensus price target broadly unchanged at AU$5.20.

  • Full year 2022 results:

    • EPS: AU$0.14 (up from AU$0.17 loss in FY 2021).

    • Revenue: AU$7.57b (down 3.9% from FY 2021).

    • Net income: AU$347.0m (up AU$761.0m from FY 2021).

    • Profit margin: 4.6% (up from net loss in FY 2021). The move to profitability was driven by lower expenses.

    • Combined ratio: 89.6% (up from 88.4% in FY 2021).

    • Revenue was in line with analyst estimates. Earnings per share (EPS) missed analyst estimates by 1.2%.

    • Over the next year, revenue is forecast to grow 12%, compared to a 3.7% growth forecast for the insurance industry in Australia.

OVERVIEW:

  • Exchange: ASX

  • Ticker: IAG

  • Sector: Finance / Multiline Insurance.

COMPANY DESCRIPTION:

Insurance Australia Group Limited is a multinational insurance company headquartered in Sydney, Australia. IAG was formed by the demutualisation of the NRMA Insurance business in July 2000 and a return of shares to the members of NRMA.

FINANCIAL OVERVIEW:

  • Market Cap - $10.94 billion

  • P/E Ratio - —-

  • Dividend Yield - 4.50%

  • Return-On-Equity (5 year avg %) - 2.52%

  • Interest Coverage - —-

  • Year Net Income Growth Rate (5 year avg %) - -20.36%

  • Earnings Per Share (5 year avg %) - -19.33%

  • Current Ratio - 0.84

  • Revenue Growth Rate (5 year avg %) - 0.56%

RECOMMENDATION:

  • Buy Range - $4.61 - $6.24

  • Profit Target - $9.06 (approx 67.0% ROI)

  • Stop Loss - $2.84

  • Risk:Reward - 1:2.5

CHART: