Admiral: Thesis Vindicated in H1, But Was This the Peak?
Company Update (ADM LN) (Buy): EPS rose by 34.9% in H1, driven by a rebound in U.K. Motor, but premiums are now falling.
Highlights
Shares have now gained 30% in a year as our thesis is vindicated.
U.K. Motor benefited from both price hikes and market share gains.
Other businesses had mixed performances and remained small.
U.K. Motor is entering a down cycle and growth will slow from H2.
At 2,960p, we see 45% upside (12.4% p.a.) by end of 2027. Buy.
Introduction
We review our Buy rating on Admiral Group PLC after H1 2024 results on Thursday (August 15). Admiral shares have risen by 5.3% in the two days since results, taking their price gain in the past year to 26.1% (30.0% with dividends):
Admiral Share Price (Last 1 Year)
Source: Google Finance (16-Aug-24).
Admiral has been a top-5 holding in our “Select 15” model portfolio since July 2023, as well as one of our largest holdings in real life. We took a significant amount of profit in the first hour of trading on Thursday.
H1 results vindicated our investment case. Shares are still attractive with a forecasted low-teens annualized return, but earnings growth are likely to slow from H2, as the U.K. motor insurance cycle has turned negative, and Admiral’s other businesses remained relatively small with some of them facing challenges.
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