- Operating profit beats forecasts
- Solvency and dividend better
- Shares drop 14% in active trading
Just to prove that sometimes, even if you know in advance a company is going to deliver good news, you don’t know how the market will react, investors in FTSE 250 retirement savings specialist Just Group (JUST) will be wondering why the shares have tumbled when the firm beat estimates.
As of mid-morning Just Group shares were down 23p or 14% to 140p, their biggest one-day decline since the middle of March 2000, on higher-than-average volume.
RESULTS SHOW STRONG PROGRESS
With today’s results, which cover the year to December 2024, Just Group has delivered better-than-expected operating profit and over-delivered on chief executive David Richardson’s promise to double earnings in five years by doubling them in three years.
Moreover, the company’s markets remain buoyant and it can grow its earnings ‘at an attractive rate from this significantly higher level’ while continuing to ‘compound further growth in shareholder value,’ says Richardson.
There is certainly no arguing with the results – as flagged ahead of the release, retirement income sales have been strong, rising 36% last year to £5.3 billion and driving a 30% increase in new business profits to £460 million.
Operating profit grew 34% to £504 million, above market forecasts, on the back of higher sales, higher recurring in-force profit and scale benefits.
Return on equity increased from 13.5% to 15.3% and tangible net assets rose 30p to 254p, creating what the company calls ‘a rapidly growing store of long-term value’.
The Solvency II or capital coverage ratio increased to 2014%, and importantly sensitivity to interest rates and residential property values have reduced as the portfolio has become increasingly diversified.
WHAT ARE ANALYSTS SAYING?
Jefferies’ financials specialist Philip Kett could only find fault with Just Group’s tangible net asset value which he thought was mildly below the consensus.
On the other hand, operating profit and the margin were better than hoped as was the Solvency II ratio and the final dividend which was bumped up 20% to 2.5p.
Meanwhile, analysts at JPMorgan repeated their ‘overweight’ rating on the stock and their 200p per share price target.
Analysts at Royal Bank of Canada rated the shares ‘outperform’ following the results and raised their price target from 190p to 200p.
