Leading insurance broker Steadfast Group Ltd (ASX: SDF) has reinforced to investors the defensive nature of the company's underlying business with the announcement of a strong set of full year numbers.
Here are the highlights:
- Gross Written Premium (GWP) placed by the Steadfast network increased 8% to $4.4 billion
- Consolidated revenue soared 72% to $298.7 million
- Earnings before interest, tax and amortisation (EBITA) jumped 45% to $90.4 million
- Underlying net profit after tax but before amortisation (NPATA) leapt 38% to $56.7 million
- Underlying cash earnings per share gained 23% to 9.79 cents per share (cps)
- A final fully franked dividend of 3 cps bringing total dividends for the year to 5 cps. Steadfast's shares will trade ex-dividend on September 11 with a payment date set for October 14.
Solid performance with more to come:
Similar to peer Austbrokers Holdings Limited (ASX: AUB), Steadfast has a long pipeline of potential acquisition opportunities to expand its network and this was no exception in financial year 2015 with new brokers joining the network largely responsible for all of the increase in GWP.
Looking forward, management has provided the following guidance for the current financial year…
"Cash EPS growth of between 10% and 14% based in particular on flat market conditions and no material acquisitions. This equates to an NPATA of between $80.0 million and $83.0 million, an increase of between 41% and 46%. The growth is driven by the benefit of a full year from FY15 acquisitions and organic growth. The first half/second half split is expected to be similar to the split in FY14 of 47%/53% assuming no material acquisitions."
Based on the mid-point of the above guidance, Steadfast's stock is currently trading on a forward price-to-earnings ratio of 13.6 times which appears reasonable considering the long-term growth outlook, defensive characteristics and quality of this business.
