Admiral: Stock Cheapest Since March 2020 Even As U.K. Motor Cycle Turns

Jun. 22, 2022 12:27 PM ETAdmiral Group plc (AMIGF), AMIGYDIISF, DIISY, SBIGY23 Comments
Librarian Capital profile picture
Librarian Capital
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Summary

  • Admiral shares have fallen 43% from their peak to their lowest since March 2020, with a 14.1x P/E and a 6.7% Dividend Yield.
  • The pricing cycle in U.K. motor insurance has started to turn, albeit unevenly and with price increases lagging claim cost inflation.
  • We expect price increases to accelerate and benefit Admiral. In the meantime, competitors have flat or declining market shares.
  • Earnings should be resilient against recessions and inflation, and higher interest rates will benefit Admiral's Investment Income.
  • With shares at 2,103p, we expect an exit price of 3,544p and a total return of 97% (23.0% annualised) by 2025 year-end. Buy.
An Asian Insurance adjuster inspecting damage to vehicle

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Introduction

We revisit our Admiral Group PLC (OTCPK:AMIGY) investment case after shares fell to their lowest level since March 2020.

Admiral’s share price has now fallen by 43.3% since their peak in August 2021. Compared to October 2020, when we

This article was written by

Librarian Capital profile picture
7.8K Followers
Global, long-term, fundamentally-oriented & concentrated investing. With more than 10 years' buy-side experience, I look at stocks globally and across industries, with a focus on the U.S. and U.K.. My investing style can best be described as "Quality Growth" or "Growth At a Reasonable Price". (previously writing under the name "Blue Sky Capital" until December 2019)

Disclosure: I/we have a beneficial long position in the shares of AMIGY either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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