Pinnacle share price up 10% despite worst ASX day in 12 months

The Pinnacle Investment Management Group Ltd (ASX: PNI) share price surged more than 10% higher yesterday despite the ASX enduring its worst trading day in more than 12 months.

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The Pinnacle Investment Management Group Ltd (ASX: PNI) share price surged more than 10% higher yesterday despite the ASX enduring its worst trading day in more than 12 months.

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Why did the Pinnacle Investment share price surge?

The Pinnacle share price reported its full-year earnings for the financial year ended 30 June 2019 (FY19), which was headlined by a 32% increase in underlying net profit after tax (NPAT).

Pinnacle's funds under management (FUM) climbed 43% year-on-year (YoY) to $54.3 billion, despite a difficult year for the wealth management sector; however, this did include $6.8 billion of FUM acquired in July 2018.

Another positive for investors was Pinnacle's net inflows of $1.5 billion throughout FY19 as it emerged unscathed from the 2018 Royal Commission, while $2.9 billion of fund inflows came from retail rather than institutional investors.

Pinnacle's underlying earnings per share (EPS) rocketed 28% higher compared to the prior corresponding period (pcp), climbing to 18.3 cents per share (cps) as the company increased its dividend per share (DPS) by 33% to 9.3 cps.

Another factor in the share price increase was the company's strong balance sheet situation, with cash on hand of $51 million as at the end of financial year.

Foolish takeaway

While the Pinnacle share price rocketed 10.34% higher to $4.27 per share at market close yesterday, the S&P/ASX 200 (INDEXASX: XJO) index closed down 2.44% at 6,478.1 points in its worst trading day in more than 12 months.

The Pinnacle share price proved a major outperformer in yesterday's trade, but the real question is whether or not the share price can continuing climbing throughout August – particularly if we see further escalation in the US–China trade war.

While I'm not personally looking to invest in Pinnacle, this latest outperformance would suggest that it's a better option in the wealth management space than AMP Ltd (ASX: AMP) or IOOF Holdings Limited (ASX: IFL) in the near-term.

Motley Fool contributor Kenneth Hall has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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