How is this ASX 200 financial stock popping 6% today?

This lucky company has just swung into the green in 2024…

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Man pointing at a blue rising share price graph.

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Finally, the S&P/ASX 200 Index (ASX: XJO) seems to be giving investors some much-needed relief. After the steep falls we've witnessed this week, the ASX 200 has risen by a decent 0.52% so far today. But let's talk about one ASX 200 financial stock that is putting those gains to shame.

That stock in question is Challenger Ltd (ASX: CGF). This ASX 200 financial stock and annuities provider closed at $6.48 a share yesterday evening. But this morning, Challenger shares opened at $6.66 and are currently up a rosy 6.02% to $6.87 each.

This one-day gain alone is more than Challenger's entire year-to-date return over 2024 so far – 5.13%.

So how has this financial stock exploded so convincingly in value today?

ASX 200 financial stock upgrades guidance after big rises

Well, it appears this share price pop is a result of a quarterly market update Challenger released to investors this morning before market open.

In this update, Challenger informed investors that its group assets under management had grown by a healthy 6% over the three months to 31 March to $124 billion. The ASX 200 financial stock's funds under management also grew by 6% up to $114 billion. Challenger also reported that it enjoyed $202 million worth of 'Strong Lifetime annuity sales over the quarter, up 37%.

This all helped Challenger to upgrade its previous profit guidance for the 2024 financial year. It is now expecting to come in "at the top end" of its $555 million to $605 million normalised net profit after tax guidance range.

Here's some of what Challenger CEO Nick Hamilton told investors about these results:

I am very pleased with the continuing success of our strategy to prioritise growing longer duration and more valuable annuity business, which is improving the quality of our Life book growth and financial performance.

Sales across our retirement income products in Life have remained strong, supported by rising demand for guaranteed lifetime income and a growing number of Australians entering retirement and aged care.

As we continue to execute our sales remix strategy, we have seen a pick-up in new business tenor that has led to a significant reduction in maturities and will further support future book growth…

Challenger is well placed to finish the year strongly and we're pleased to upgrade our full year profit
guidance to the top end of the range.

So it appears investors have unsurprisingly embraced this quarterly update with gusto today, judging by the huge surge in this ASX 200 financial stock's share price that we are currently witnessing

Challenger share price snapshot

As we mentioned above, Challenger shares weren't performing too well until today's big jump. The company is now up 5.13% year to date in 2024, as well as by 6.62% over the past 12 months. Saying that, investors have still enjoyed a 20% or so stock price bump since late November.

At the current Challenger share price, this ASX 200 financial stock has a price-to-earnings (P/E) ratio of 28.78, with a dividend yield of 3.64%.

Motley Fool contributor Sebastian Bowen 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 has recommended Challenger. 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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