Admiral Share Forecast October 2021 – Time to Buy ADM?
Please note that we are not authorised to provide any investment advice. The content on this page is for information purposes only.
Shares of Admiral (LSE: ADM) have experienced their worst performance of the year yesterday, as their price fell 5.5% after shareholder Munich Re sold a large number of shares. After trading above 3000p earlier in the week, they are currently trading around 2879p. Many investors feel that this short-term hit could be a good buying opportunity.
Admiral – Technical Analysis
According to the financial statement released by Admiral, total revenue for 2020 was at £1.30 billion with a profit margin of 40.69% compared to £1.23 billion in 2019. The market cap at the moment stands at £9.127 billion with total assets worth £6.241 billion.
Moving averages such as Exponential Moving Average (10)(2986), Simple Moving Average (10)(2992), Exponential Moving Average (20)(3054), Simple Moving Average (20)(3032), and Exponential Moving Average (30)(3118). Oscillators such as Stochastic RSI Fast (3, 3, 14, 14)(49), Williams Percent Range (14)(−78), Bull Bear Power(−251) and Ultimate Oscillator (7, 14, 28)(46) are neutral.
67% of all retail investor accounts lose money when trading CFDs with this provider
Recent Developments
Launched back in 1993 as a division of Brockbank, Admiral was bought in 1999 by a Barclays Private Equity-backed management buyout. Throughout its history, the company has specialized in providing car insurance for drivers of high-performance cars, people living in cities and young drivers. As reported in August, the company added 640,000 new UK customers last year as a result of a huge demand for second-hand cars. It also experienced a 14% increase in international policyholders to reach 1.71 million.
2020 saw a decrease in motor claims, much lower than historical levels. This allows Admiral to increase its margins, additionally boosted by a simultaneous fall in bodily injury claims which tend to be more expensive. The number of cars on the road is expected to climb which may increase customer numbers while decreasing profitability with the increase in claims.
The recent drop in share prices has originated as a result of the sale of12.1m shares by one of the company’s biggest shareholders, Munich Re. It is also the company Admiral uses to underwrite some car insurance businesses. With a long history between the two companies, Munich Re still owns 18 million shares after the above-mentioned sale. The company announced that the arrangements with Munich Re will be further extended. The company has also announced that it would continue some businesses on a co-insurance basis through to 2029. It is thought that the company sold some stock to reduce the risk with such partnerships.
Should You Buy ADM?
Admiral shares have been appealing to many investors during the pandemic. It is believed that the company will fair well if the Government advises working from home during the winter. As infection rates increase in the UK, lower car usage could result in lower claims, which would in turn boost profitability. This phenomenon was seen in 2020.
Admiral shares also have large dividends to offer, which sits at 5.26% currently as a result of the share price dip. This is also 2% over the FTSE 100 average yield. The lowest dividend yield in the last decade was 2.5%. All of this points toward a sustainable dividend level which is likely to be paid well into the future. Overall, thanks to the latest price dip, these shares should be picked up at the earliest.
Buy ADM Stock at eToro from just $50 Now!
