What: On Wednesday the share price of financial services firm Challenger Ltd (ASX: CGF) – which enjoys a market-leading position in the provision of annuities – flopped a massive 6.8% despite no specific news.
Admittedly, it was a bad day for the market as a whole with the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) sinking 1.3%.
Other financial sector stocks also found the going tough on Wednesday. For example, Australia and New Zealand Banking Group (ASX: ANZ) was out-of-favour with investors and under selling pressure; the bank's stock closed the day down 4.4%.
So What: Since the beginning of calendar year 2015, Challenger's share price has now lost a total of 15.4% with the past five trading sessions responsible for 10.8% of that overall decline.
The move lower has taken the stock below the $7.50 level (it closed on Wednesday at $7.37) which means the stock now trades closer to its 52-week low of $6.08, than its 52-week high of $9.
Now What: Analyst consensus data provided by Morningstar shows a forecast earnings per share for the 2016 financial year of 59.4 cents per share (cps) and a forecast total dividend of 32.5 cps.
These forecasts when combined with the recent falls in the share price have placed the stock on what some may consider an undemanding price-to-earnings (PE) multiple of 12.4x and an attractive fully franked dividend yield of 4.4%.
Indeed, with the financial index trading on a forecast PE multiple of 13 times, Challenger appears to be trading at a discount to its peers.
