Admiral: 5% Dividend Yield And Multi-Year Compounding Ahead (Preview)
Company Update (ADM LN) (Buy)
Summary
Admiral stock has gained 20% since our upgrade in October, but still represents a multi-year compounder and has a 4.9% Dividend Yield.
The U.K. Motor business grew its policy count by 8.7% in 2020, continuing long-term share gains; new regulations may help further.
There was growing momentum in other businesses, with International reaching profitability and U.K. Household profits doubling.
Admiral stock is trading at 18.9x 2020 EPS, and the normalized P/E is around 20x once we exclude the one-off factors in 2020.
With shares at 3,217p, we expect a total return of 52% (13.9% annualized) by 2024 year-end, in just over 3 years. Buy.
Introduction
We review our investment case on Admiral Group PLC after the stock reached a new all-time high, 8 months after we upgraded our rating to Buy.
Since our upgrade in October 2020, Admiral stock has gained 20% (including dividends, in GBP), ahead of peers Direct Line and Sabre Insurance, though behind the U.K. benchmark FTSE All-Share.
As we will expl…