Date of Data Capture: 02/03/2020
Name: AUB GROUP LIMITED (AUB)
Classification: Insurance Broker
Current Price: $13.76
Market Capitalisation: $1.02B
Forecast EBITDA Growth: 23.06%
Yield Estimate: 3.35%
Consensus Price Target: $14.68
# Covering Analysts: 4
Discount at Current Price: 6.69%
Price Target Trend (3-Month): Up +21.83%
Signal Timeframe: Quarterly-Monthly-Weekly
Trend Bias: Up-Down / Long-Medium
Focus: (Dividend Income &) Capital Growth
Set up Notes:
• Formerly known as Austbrokers, this insurance and risk services specialist has been growing earnings steadily but also has forecasts for stronger growth expectations out to 2022.
• Persistent broad gains across sales, earnings and profits since 2017 have benefitted from margin growth and this is set to continue and grow stronger, supporting a growing dividend.
• Pricing shows a strong long-term uptrend, only occasionally pulling back in medium-term consolidations, and we think we have an entry opportunity with fresh shorter-term strength combining well with long-term momentum.
Support ($): 13.00, 12.00, 11.00 and 10.00.
Resistance ($): 14.00, 15.00 & clear.
Growth Focus: AUB GROUP LIMITED (AUB)
Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index.
Most investors try to avoid risk, but we prefer to manage it – and this where our current focus sits with AUB Group firming higher on good performance and forecasting – price is now pushing higher against old resistance, but we believe this is an attractive opportunity for a growing insurance company that doesn’t come at too high a premium.
Originating in 1985, and previously known as Austbrokers, AUB Group is a risk specialist based in Australia, offering management, advice and solution services to clients throughout domestic markets, as well as a growing presence in New Zealand. The company operates on an equity-based structure, conducive to its open and active acquisition strategy, and the company’s direct investments into insurtech business offers great potential, as well as being well positioned for good organic growth with earnings tip to increase more than 23% on last year.
Performance has been mixed, with strong periods leading price higher, before contracting under slower growth conditions. Here we see good forecasting from analysts with strong expectations for sales growth to lead earnings higher, supported by increasing margins and profits out to 2022. This is expected to maintain and improve dividend yield, already handy at over 3%, though we are more focused on capital growth. Here we find the stock carrying strong earnings growth expectations, good analyst sentiment and current attractive discount to aggregate price targets with no negative sentiment views held, in fact price targets have risen by more than 21% in the last 3 months alone.
Prising history shows a strong longer-term uptrend occasionally interspersed with intermediate pullbacks and consolidations leading to favourable buying opportunities, best signalled in the quarterly frame. Here we see that same signal emerging here as price breaks through 12-month linear resistance, set in place since August 2018, in the last few weeks. We do see $14 resistance nearby overhead, which could cause some volatility, but should that break the stock is facing blue skies with good momentum.
Looking to take advantage of any short-term weakness we think we should see AUB pushing higher on positive signalling with good performance and forecasting in support, which is always good policy.