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abrdn share price down 23% last year, should i buy?

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In the volatile asset management space, abrdn (LSE:ABDN) share price has fallen 23% in the past year. Many companies in this sector are forced to grow rapidly amid regulation, fierce competition and limited profits. But is there possibly good news around the corner?

Basics

The business is a major player in the asset management sector. With operations in the UK, Europe, North America, and Asia, it offers a wide range of investment products. The rebranding from Standard Life Aberdeen to Aberdeen in 2021 was part of a strategic effort to modernize and streamline. Despite these changes, the share price has struggled, and has been down significantly ever since.

Financially, abrdn’s recent performance has been mixed. Earnings are forecast to grow by 55.37 percent annually, which is 19 percent higher than the sector average. However, revenue is expected to decline in the coming years, with revenues from the sector generally continuing to grow. Not a disaster, but possibly a sign of a company transition.

Of interest to investors is that the business has an attractive dividend yield of 10.35%, although it has fluctuated in recent years, and does not include earnings or cash flow, suggesting potential sustainability issues. does..

Too many risks

For me, there are enough risks to worry about here. My main concern is the intense competition within the asset management industry. Rivals love. Black rock And Vanguard Often dominate the market, putting pressure on smaller firms on fees and market share. Smaller and less diversified companies in this sector must constantly innovate and retain customers to remain competitive.

Economic uncertainties, such as inflation and geopolitical tensions, have also clearly affected the gap in recent years. The share price of such companies depends on the performance of the investment, and it becomes very difficult to meet expectations in such a difficult market.

Despite such a large reduction, a discounted cash flow calculation shows that the turnover is still up by about 9%.

In such volatile times, extensive restructuring efforts, while aiming for long-term growth, involve short-term disruptions and costs. There is a chance that the worst of this uncertainty is now over, but it is clearly a difficult risk to mitigate.

Ability

Despite these risks, there are compelling reasons to consider investing in abrdn. If one believes in the company’s turnaround strategy and long-term potential, a substantial fall in the share price may represent a buying opportunity. Forecasted annual revenue growth suggests that the company is on the road to recovery.Even this year turned a small profit.

The price-to-sales (P/S) ratio, 1.8 times puts it well below the sector average of 5.1 times. If the business can resolve recent volatility, maintain recent growth in earnings, and reassure investors, I wouldn’t be surprised to see this one reward long-term investors.

Overall

The competitive landscape, market volatility, and restructuring efforts clearly call for a cautious approach for investors. While the recent decline in the abrdn share price may represent an opportunity, I still think there is a long way to go until investors are confident in their judgment. I can see the potential, but will just add to my watchlist for now.


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