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Investing.com -- Just Group Plc (LON:JUSTJ) shares sank by 14% on Friday, despite the company delivering a solid full-year 2024 earnings report.
The UK-based financial services group reported an underlying operating profit of £504 million, a 34% increase year-over-year, slightly exceeding market expectations.
The company also announced a 20% rise in its dividend per share to 2.50 pence, underscoring management’s confidence in its future earnings trajectory.
Jefferies analysts highlighted that margins and operating profit were slightly above consensus, with the new business margin at 8.7% (+0.3 percentage points above expectations) and underlying operating profit 1.0% higher than forecasts.
However, tangible net asset value per share of 254p came in 2.7% below expectations, and Solvency II organic capital generation was 4.7% lower than anticipated.
Barclays (LON:BARC) noted that Just Group’s decision to invest more in development costs impacted operating profit, which, at £504m, was below their £528m estimate but in line with broader market expectations.
The new business margin declined slightly from 9.1% in FY23 to 8.7%, largely due to a lower-margin deal in the second half of 2024, though it remained above consensus expectations.
Full-year life sales reached £5.3bn, up 36% from £3.9bn in the previous year. Management expects new business strain to remain below their 2.5% target.
The Solvency II coverage ratio of 204% was stronger than expected, up from 197% in FY23. Analysts attribute this improvement to reduced sensitivity to interest rates and property values, which provides the company with greater flexibility in managing its capital ratio.
Cash generation remained in line with expectations at £119m, a key metric for long-term valuation.
The decline in the new business margin, along with higher development expenditures, may have contributed to the negative market sentiment.
RBC Capital Markets remains optimistic, reiterating its ’outperform’ rating and raising its price target to 200p from 190p. Barclays also maintains a positive outlook, emphasizing management’s confidence in continued growth.