Where next for Aviva plc after 22% fall in 6 months?

Could Aviva plc (LON:AV) (AV.L) deliver improving share price performance after a challenging period?

Aviva plc
Aviva plc

The last six months have been tough for the Aviva plc (LON:AV) (AV.L) share price. The company’s market value has declined by around 22% during that time, which has left it trading at around 420p.

In my view, there could be further uncertainty ahead for the business. It is in the process of searching for a new CEO following Mark Wilson’s decision to stand down. Under a new CEO, there could be strategy changes ahead for the company, since from my experience new CEOs often wish to make their own mark on the business.

Of course, a new CEO may continue with the current strategy. This would not be a bad idea in my view. It has seen the company restructure in recent years, which has helped to turn it from being loss-making in 2012 to being highly profitable at the moment. With excess capital set to be deployed in areas such as acquisitions and reducing its leverage, the prospects for the business seem to be bright in my opinion.

With Aviva’s share price having fallen in recent months, the company now has a P/E ratio of around 7.2. This suggests to me that it could be relatively unpopular at the moment, and that it may offer a margin of safety. Given what I view as improving prospects in fast-growing markets, as well as a solid position in more established markets, I’m optimistic about the company’s potential to generate improving EPS growth in future years.

Therefore, while its recent performance has disappointed, and it has underperformed the FTSE 100 in the last six months, I’m upbeat about the long-term growth outlook for Aviva. I feel that it has a sound strategy, a strong position in key growth markets and also offers a relatively low rating which could indicate that it offers good value for money.

About Robert Stephens 5138 Articles
Robert Stephens is a CFA Charterholder and an Equity Analyst by trade. He is a passionate private investor who has been buying and selling shares for many years, owning a wide range of UK shares in the process. He has written for Citywire and The Motley Fool US and now runs his own business. To contact Robert, please email [email protected] or use one of the other contact methods available on the 'Contact Us' page