Legal and Generals share price LON-LGEN is sharply down over three years but has rallied near term on an improving outlook at the insurer
Beauty is in the eye of the beholder they say, and we could apply the same thing to the performance of Legal and General shares. Because if we look back over the last 52 weeks they are down by almost -5.50% and if we stretch that out to three years, then the deficit becomes -16.0%.
However, near-term things look much better for the insurer, as over the last 6-months its shares have rallied by more than +9.0%, and over the last month, the stock has posted 6 consecutive new highs.
Legal and General was upgraded to buy by HSBC at the end of January with a price target of 265p some +12.0% above the current share price.
The stock sits on an undemanding forward price-earnings of less than 10 times and on a price-to-sales ratio of just 0.36. With a dividend yield of 8.70%.
The company will report its full-year results on the 12th of March and is scheduled to trade ex-dividend on April 24th, which suggests that there will be a payout.
When it last reported in August the company was able to point to growth in core operating profits, core EPS and and its operational Return on Equity or ROE.
At that interim stage Legal and General felt able to raise the dividend by +5.0%.
The group’s range of private market funds and investments attracted inflows from investors who were keen to access this growth area of the markets.
Assets under management in this division jumped to £52.0 billion a rise of + £4.0 billion over the prior year. Part of an overall AUM of £1.136 trillion.
The market will be looking for continued growth in AUM, but also for any sign that profitability at the insurer is picking up from the current lowly margin of just under 1.20%.
If investors can sense a recovery in Legal and General’s fortunes then the share price could appreciate quite rapidly.
However, what they won’t want to see is any deviation from the path to recovery.
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