Admiral: Shares At 16x 2022 EPS, Likely The Trough This Cycle
(Preview) Company Update (ADM LN) (Buy)
Summary
Admiral reported 2022 profits despite double-digit claim cost inflation and a key regulatory change, albeit 7% lower than in 2019.
The core U.K. Motor business had 5% more profits than in 2019, but U.S. losses rose sharply and U.K. Household was hit by extreme weather.
2023 should see a substantial improvement in U.K. profits. Industry prices have already risen sharply and inflation is moderating.
U.S. losses are "expected to strongly reduce in 2023" and the business may be sold. The European business is progressing.
With shares at 2,003p, we expect a total return of 73% (24.6% annualized) by 2025 year-end. The Dividend Yield is 5.6%. Buy.
Introduction
Admiral Group plc released full-year 2022 results on Wednesday (March 8) morning. Shares fell 8% at the open but recovered to finish the day down 4.0%. At 2,003p, they are down nearly 50% from their 2021 peak.
We upgraded our rating on Admiral to Buy in October 2020, and after Wednesday’s decline Admiral shares are currently down 10% (a…