Date of Data Capture: 25/11/2019
Name: PSC INSURANCE GROUP LIMITED (PSI)
Classification: Insurance Brokers
Current Price: $2.95
Market Capitalisation: $800 M
Forecast EBITDA Growth: 16.40%
Yield Estimate: 2.86%
Consensus Price Target: $2.80
# Covering Analysts: 2
Premium at Current Price: 5.08%
Price Target Trend (3-Month): Flat +-0%
Signal Timeframe: Quarterly-Monthly-Daily
Trend Bias: Up-Flat / Long-Medium
Focus: Capital Growth
Set up Notes:
• PSI is continuing its recovery after emerging from a minor year-long consolidation five months ago, and this new-found strength is well supported by good reporting and forecasting.
• Performance has shown steady and strong growth from 2015, and this is expected to continue out to 2022 with recent acquisitions in the UK and US paving the way for future growth.
• Pricing shows a healthy move through major resistance structure in June, and then again with minor resistance falling in the last few weeks, the stock is building momentum here, with buy signals present across multiple timeframes.
Support ($): 2.90, 2.80, 2.70, 2.60 & 2.50.
Resistance ($): 3.00, 3.10, 3.20 & clear.
Growth Focus: PSC INSURANCE GROUP LIMITED (PSI)
Our primary focus here is capital gain, we will select our stocks from the ASX Top 500 All Ordinaries Index.
When investing it is necessary to manage risk, and take steps to protect against potential worst-case scenarios, so it seems fitting that we are taking a closer look at PSC Insurance Group (PSI) as the growing underwriting specialist continues higher on good performance and looks like it could be a chance worth taking.
Emerging on the ASX in late 2015, PSI is a diversified insurance services company, operating throughout Australia, New Zealand, the United States, and the United Kingdom. Conducting business through brands like PSC Insurance Brokers, Chase Underwriting and Paragon the company provides services to more than 90,000 customers. The company has been seeing broad-based organic growth but also has a very active acquisition strategy, most recently seen expanding market share in the US and UK.
Performance has been strong and shows increasing revenue, earnings and profits up strongly since 2016, also supporting a fair dividend, though we are primarily attracted to the company for its growth prospects. And indeed the strong trend of expansion is set to continue with forecasts showing expectations out to 2022, primarily driven by strong sales and earnings growth. Analyst coverage is thin, so while there is a slight premium to consensus targets, these valuations are largely static and don’t correlate well to price performance.
Pricing history shows a brief but successful time on the market for PSI, where strong longer-term rallies in 2016 and 2017 were followed by medium-term consolidations before the stock plateaued-out in 2018. Since then the stock has tested overhead resistance at $3.20 twice last year before eventually moving into downtrend taking prices 30% lower by early 2019. Emerging from this constructive base 6 months ago we now find the stock crouched beneath overhead structural resistance at $3, but with good longer-term momentum building, we think they look good here.
With an attractive combination of strong organic growth and an acquisition strategy carving out international market space we believe PSI looks good for an entry here, and if expected gains come through as expected, this expanding insurance company could have you covered.