This week, four of the big financial companies, including insurance stocks, have reported or are ready to report their most recent full or half-year results.
Australia's biggest insurer, QBE (ASX: QBE), failed to impress investors when it today released a disappointing 34% drop in NPAT. The market reacted and sold down the share price as low as 8% in early trading. However, as fellow Motley Fool contributor, Tim McArthur, said "a keen focus on costs and operating metrics should position the company to only improve profit margins in the current environment but also position the insurer for an improved interest rate environment". It seems all isn't lost for investors looking to position themselves for long-term growth.
Tomorrow, Suncorp (ASX: SUN) shareholders will be given insight in whether or not the company's stellar stock price rise in the past 12 months is warranted. Despite a special dividend and strong first-half results, the impact of its 'bad bank' loan sale to Goldman Sachs has cost the company. As a result, in late July the company released a lower guidance and the market was not impressed. Short-term investors were spooked and the share price has gone sideways since. In the long-term there is money to be made from Suncorp shares, but they are currently more than fairly priced.
For investors willing to take on a little more risk in their portfolio, Insurance Australia Group (ASX: IAG) has realised an exceptional insurance profit margin which is likely to be reflected in its report due to be realised on Thursday. IAG's failed UK expansion may be the reason investors have left this stock on watchlists rather than in portfolios.
Source: Google Finance
So far, this reporting period has been underwhelming, but there are still a handful of companies vying for a spot in your portfolio. Challenger's (ASX: CGF) results released yesterday are likely to help it outperform the market in the next 12 months. Not only is it well positioned for short-term fluctuations, longer term investors could rest easy knowing that 'Baby Boomers' are now entering retirement and Challenger is in prime position to take advantage of the long-term trend. Yesterday the company announced a statutory profit increase of 180% year-on-year. Morgan Stanley and Citi raised their targets for the stock upon yesterday's result.
Foolish takeaway
Companies that produce good annual results are likely to outperform the market in the following 6 and 12 months. However, buying stocks that hold long-term value and pay great dividends along the way are perfect for investors who like to buy and hold. All these stocks pay good dividends but they are not our favourite dividend idea for the next 12 months.
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More reading
- Challenger posts strong full-year results
- What investors need to know about AMP's results
- Suncorp shareholders need to be in it for the long run
- Buy Challenger, not Suncorp
Motley Fool contributor Owen Raszkiewicz owns shares in Challenger.
