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Librarian Capital's Research Library

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Librarian Capital's Research Library
Librarian Capital's Research Library
Admiral: Shares At 16x 2022 EPS, Likely The Trough This Cycle

Admiral: Shares At 16x 2022 EPS, Likely The Trough This Cycle

(Preview) Company Update (ADM LN) (Buy)

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Librarian Capital
Mar 09, 2023
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Librarian Capital's Research Library
Librarian Capital's Research Library
Admiral: Shares At 16x 2022 EPS, Likely The Trough This Cycle
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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…

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