ASX 200 stock Pinnacle dives 7% on earnings miss

The ASX 200 financial stock is under selling pressure today after seeing profits and earnings slip during the half year.

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Key points

  • The Pinnacle share price is deep in the red on Thursday
  • The ASX 200 financial company reported a 24% fall in half-year NPAT
  • Management declared a fully franked interim dividend of 15.6 cents per share, down 11% from the prior corresponding half-year

S&P/ASX 200 Index (ASX: XJO) stock Pinnacle Investment Management Group Ltd (ASX: PNI) isn't joining in with the broader share market rally today.

Shares in the ASX 200 financial services company are down 7.3% in afternoon trade at $8.95 per share.

This comes following the release of Pinnacle's half-year financial results for the six months ending 31 December (1H FY23).

Here's what investors are mulling over.

What did Pinnacle report?

The ASX 200 financial stock is under selling pressure today after seeing profits and earnings slip during the half year.

Net profit after tax (NPAT) attributable to shareholders came in at $30.5 million. That's down 24% from the $40.1 million reported in the prior corresponding period of 1H FY22.

Diluted earnings per share (EPS) attributable to shareholders declined 26% from 21 cents in 1H FY22 to 15.6 cents.

Management declared a fully franked interim dividend of 15.6 cents per share, down 11% from the prior corresponding half. This represents a payout ratio of 100% of diluted EPS.

The ASX 200 financial company reported receiving only $900,000 (post tax) in performance fees earned by Pinnacle Affiliates contributing to its NPAT. That figure is down from $6.4m in 1H FY22.

Net outflows over the six months were domestic institutional driven. Pinnacle reported:

  • Domestic institutional net outflows of $2.5 billion
  • Retail net inflows of $300,000 million
  • Offshore net inflows of $700,000 million

On the balance sheet, Pinnacle had cash and principal investments of $179 million as at 31 December. That includes the fully-drawn CBA facility of $120 million, which the company stated was "deployed into liquid funds managed by Affiliates until required".

Addressing the slip in profits over the half year, Pinnacle said:

Pinnacle and Affiliates continue to actively pursue 'Horizon 2' growth initiatives, recognising that these will moderate profits in the short-term, but are designed to provide growth opportunities over the medium-term (the return on these 'Horizon 2' investments in the past has been extremely high).

How has this ASX 200 stock been tracking?

The Pinnacle share price leapt 19% in January.

But with today's slide factored in, the ASX 200 stock is now up 3% in 2023.

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended Pinnacle Investment Management Group. The Motley Fool Australia has positions in and has recommended Pinnacle Investment Management Group. 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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