Admiral Group plc Leads Aviva plc, Barclays PLC, Lloyds Banking Group PLC And HSBC Holdings plc After H1 Results

Admiral Group plc (LON: ADM) stays ahead of Aviva plc (LON: AV), Barclays PLC (LON: BARC), Lloyds Banking Group PLC (LON: LLOY) and HSBC Holdings plc (LON: HSBA) in 2016

Admiral Group plc
Admiral Group plc

Admiral Group plc (LON: ADM) (LSE: ADM.L) has today released results for H1 2016. Group profit before tax increased by 4% to £193 million which allowed Admiral to increased interim dividends per share by 23% to 62.9p. This puts it on a yield of 5.2%.

Admiral’s performance was helped by its international operations. During H1 it launched into two new states and its longer-established European insurance operations moved a step closer to profitability. Admiral’s international car insurance customer numbers increased by 20% which contributed to a rise in turnover of 44%. Its price comparison websites such as Confused experienced rapid growth. Admiral’s operations benefited from the increased promotion of its brands.

Its core UK car insurance business benefitted from a more rational motor market. Customer numbers increased by 11% and turnover was 16% higher at £993 million. Prices have risen as the industry has transitioned towards a less volatile cycle and this has enabled Admiral to post strong growth in the size of its motor book. Its growth in home insurance indicates that it is able to successfully diversify away from its core motor offering.

Admiral has risen by 36% in 2016. That’s a far superior performance to a number of its financial services peers including Aviva plc (LON: AV), Barclays PLC (LON: BARC), Lloyds Banking Group PLC (LON: LLOY) and HSBC Holdings plc (LON: HSBA). For instance, HSBC is up by 1%, Aviva has declined by 19%, while Barclays and Lloyds are both down by 26% in 2016.

Admiral offers a high yield and its dividend continues to grow. From an income perspective it has appeal in my view. Further, its EPS is forecast to increase by 6% in the next financial year. This provides a degree of growth appeal and its strategy of diversifying into new geographies and new product areas reduces its risk profile in my opinion.

The author owns shares in HSBC and Aviva, but not in Admiral, Lloyds or Barclays at the time of writing.

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