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A Q1 trading update boosts Beazley’s share price a bit more. Is it still cheap?

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The insurance sector is performing well in 2024 so far. Beazley (LSE: BEZ) share price is no exception.

Shares rose a percent or more on the firm’s Q1 update on the morning of April 29. They are now up 24% year-to-date, and 15% over five years.

Broad sector

The sector covers a wide range of businesses from insurance to various types of investments, pensions and financial services.

Beazley, though, has a fairly direct focus. It is an insurer of Lloyd’s of London, dealing primarily in specialty risk insurance and reinsurance. But there is still a wide range of risk coverage.

Things are going according to guidance so far in 2024. And it’s fast, so so far so good.

Promotion of insurance

In the three months to March 31, it saw a 7 percent increase in insurance written premiums. And that led to a net increase of 11 percent.

The value of cash and investments on the books is up 19 percent from 12 months ago, at $10.8 billion.

CEO Adrian Cox said:We are confident to deliver our overall growth guidance for the year in the high single digits.

So what does this say about the current state of broker forecasting?


Well, the forecast makes me scratch my head a bit. I am used to seeing stocks in this sector at low prices. But Beazley has a forward price-to-earnings (P/E) ratio of just 6.2 — about half that. FTSE 100 Average

It makes approx Aviva And Legal and Generalmy top two picks in this sector, look pretty steep at P/Es of 11 and 10.5, respectively.

Yet they both boast higher dividend yields than the 3% or so we can expect from Beazley.

But after record profits in 2023, the Beazley board “up to $325 million

Risky business

At the time, the CEO said: “We believe that with the increased demand for insurance creating an increasingly risk environment, as well as a favorable rating environment, we are well positioned to continue to successfully grow our business. .

And is this the nib of a low stock price,”Accelerating the risk environment“The thing?

Beazley is at the cutting edge of global risk, and the economic waters we’re sailing in aren’t as calm as they could be. Not by a long way.

Another AI stock?

At the time of the financial year, the firm said: “We are expanding our use of AI, including piloting generative AI across multiple areas of our business.

Now, that’s all right. But the mere mention of AI can send investors rushing to buy, even when they don’t fully understand a stock.

That said, Beazley stock still seems undervalued to me. So maybe the AI ​​frenzy is dying down a bit, and it’s now being valued more rationally. I hope.

Buy one?

Beazley is a risky stock in a risky sector. And it’s prone to cycles, so buying while it’s on the way can throw off its safety, at least a little.

I am cautiously optimistic. But it will have to compete with the likes of Legal and General. Phoenix Group Holdings For my next investment cash. And I love a fat phoenix dividend.

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