This top City analyst reviews the financial sector stocks making headlines today.
Jeremy Grime spent 15 years as a financial sector analyst, working at Altium Capital, RBC Capital Markets, Panmure Gordon and most recently as Director of Research at finnCap. Jeremy is also a qualified accountant.
Jeremy's blog is written with more experienced investors in mind. However, we have included a brief glossary at the bottom of the page to help those less familiar with some of the language used. For more on key financial metrics and valuation ratios click here.
- I have recently found myself wondering if this low interest rate environment means economic cycles that we have loved and feared are now a thing of the past and the economy is more like a drunk stumbling along the pavement. And therefore maybe the underperformance of value is actually correct as the only growth is structural rather than cyclical. Until the graph below reminded me that these thoughts happen at the moment of capitulation. It may well be time for the pain trade of buying value.
- And there are some very deep value stocks out there. I would point out a few contenders in the car boot sale:
- STM Group (LSE:STM) – PER 7.2, Yield 5.2%
- Just Group (LSE:JUST) – Price/NTAV 0.2
- Morses Club (LSE:MCL) -PER 9.2, Yield 6.6%
- Miton Group (LSE:MGR) - EV/AUM 0.9%
- Gordon Dadds (LSE:GOR) -PER 7.5, Yield 5.3%
- Amigo Holdings (LSE:AMGO) – PER 6.7, Yield 7.9%
- Arrow Global (LSE:ARW) -PER 5.3, Yield 7.2%
- International Personal Finance (LSE:IPF) -PER 3, Yield 13.2%
- Bank of Georgia (LSE:BGEO) - PER 4.8, Yield 6.1%
- Plus500 (LSE:PLUS) – PER 2.5, Yield 9.6%
- TP ICap (LSE:TCAP) -PER 8, Yield 6.2%
Bank of Georgia – H1 Results
Share Price 1346p
Mkt Cap £644 million
Conflict Disclosure: No Holding
Bank of Georgia (LSE:BGEO) is a retail bank in Georgia.
- Results PBT up 8.8% to 223.4 million Georgian Lari (GEL) which equates to a ROAE of 23.7%. Impairment charge reduced from 1.7$ to 1.5%. Loan book growth was 19% in constant currency, 30% reported currency, while the Tier 1 capital adequacy was 13.3%, compared to a requirement of 11.6%. Outlook is well placed to deliver strong growth over the coming years.
- Estimates Full-year estimates look for GEL 502 million PBT, which looks reasonable in the light of GEL 223 million in H1
- Valuation PER 4.8, Yield 6%. Price/Book is 1.2 and the bank has just delivered 23% ROAE
- Conclusion The shares are down 24% since May and these are stellar results. Unless there is a Russian invasion imminent, the force of gravity on the share price will reverse.
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