How is the IAG (ASX:IAG) share price performing against the financial services sector?

The financial sector is powering past the IAG share price. Here’s why.

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The share price of ASX 200 financials giant Insurance Australia Group Ltd (ASX: IAG) is having a pretty ordinary year on the ASX.

So far, it’s gained just 4.03% since the start of 2021. IAG shares are currently trading for $4.91 apiece.

In the same time, the S&P/ASX 200 Index (ASX: XJO) has gained 12.18%. But even the ASX 200 has been beaten by the financial sector.

During the period, the S&P/ASX 200 Financials Index (ASX: XFJ) has gained 18.68%, leaving IAG’s shares in its dust.

So, why is the ASX 200 insurance giant’s share price lagging behind? Let’s take a look.

What’s holding IAG back?

While the IAG share price has been showing some volatility this year, it’s been relatively restricted.

Its met resistance at $5.50, while its lowest point of support has been $4.38.

Yet, it’s been bouncing around in-between those points pretty much non-stop.

And the reason behind IAG’s furious stagnation? Likely, a lacklustre performance. IAG hasn’t released much in the way of jaw dropping news this year.

One of the most notable movements from IAG’s shares came after the company announced its half year results in February. The IAG share price jumped 4.55% on the back of the results.

Its positive results included a 33% increase in to its insurance profits, yet it didn’t manage to break even.

As a result, it gave its shareholders a 7-cent unfranked dividend. That represents a 1.44% dividend yield.

The company states, since it handed out its last franked dividend in early 2020, it hasn’t earned a profit.

Recently, IAG released slightly disappointing preliminary results for the 2021 financial year. While the results were within a bulls roar of what analysts had predicted, they didn’t quite hit the mark.

Additionally, IAG didn’t provide guidance for the 2022 financial year. However, it did forecast its reported insurance margin would be between 13.5% and 15.5% and it’s looking to increase its natural perils allowance to $765 million.

After IAG released its preliminary results, its share price slipped slightly before recovering to finish 1% higher.

IAG share price snapshot

While the IAG share price has posted a slight year to date gain, it is currently 3.73% lower than it was this time last year. It’s also fallen 2.96% over the last 30 days.

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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of and has recommended Insurance Australia Group Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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