- The company is maintaining both the dividends and the revenue growth.
- The firm has maintained its dim but consistent revenue growth throughout the years.
- The BEZ stock price is near its immediate resistance level. See whether it will break or reclaim it.
Beazley Plc (LON: BEZ) is an insurance company that was founded in 2015. The company primarily deals in commercial lines of business through its subsidiaries and Lloyd’s syndicates. It operates through six segments: Marine, Political, Accident and contingency, Property, Reinsurance, and Specialty Lines.
Financial Analysis of Beazley Plc
We will start our financial analysis by looking at the profit and loss statement reports of Beazley stock. The first thing you will notice when you look at the income statement is the steady but slow growth in revenue. The company’s revenue was £1.3 Billion in 2016, which had grown to £3.03 Billion as of 2022, which accounts for the CAGR growth of 14%.
Looking at the nature of the firm, it is no wonder that the company doesn’t have any cost of goods sold. The operating costs account for over 40% of the revenue, leaving the Earnings before interest and taxes (EBIT) as £206 Billion. The major operational costs for the company are marketing expenditures and salaries of its employees.
The insurance giant has a large team of underwriters, actuaries, and claims adjusters, and this human resource for the company eats up a lot of its funds. The company has successfully paid its corporate taxes and has achieved a positive net income of £131 Million in 2022, which is 4.3% of the total revenue generated in the same year.
Furthermore, this financial achievement provides valuable insights into the company’s profitability ratios. Despite a slight decline compared to previous years, the Return on Equity for 2022 is 7.03%, and the price-to-earnings ratio is 32.25, while the firm is generating a 1.4% return on its assets. These ratios demonstrate the company’s ability to sustain its operations and generate profits on its invested capital into assets.
Furthermore, the company has also been giving regular dividends to its shareholders, The average dividend payout ratio is 60% over the years. The dividend is around 2.5% of the trading market price. This means that the management is committed to providing returns to its shareholders.
Balance Sheet and Cash Flow Statement
However, despite paying regular dividends, the actual growth of the company is seen in increasing its balance sheet. First, the current assets of the firm are increasing. However, looking at the increasing retained earnings of the firm, the breakdown of assets into short-term investments and debts wasn’t considered. A firm value can be expected with the increasing retained earnings.
Furthermore, the company is also significantly increasing its long-term investments, and an increase in net property plants is also visible. Along with that, Beazley is leveraging long-term debt. With a big pile of cash and huge reserves, the management will not have any trouble with the debt. The debt-to-equity ratio of the firm is 0.24 while the debt to assets ratio is 0.05. Both of these ratios indicate that the debt value is small compared to the assets and reserves.
On the other hand, due to net positive working capital and Earnings before interest and taxes (EBIT), the insurance giant is cash-positive from operations. This indicates the company’s ability to control its debtor days. Moreover, in the cash from investing activities, the firm invests cash regularly in making new investments as well as into capital expenditures. After some cash collected from financing activities, the company made a net cash flow of £68 Million in 2022.
Overall, the company’s strategic focus appears to be on achieving a net cash-positive position and consistently providing dividends to its shareholders. While its market capitalization is substantial, revenue growth may have moderated but remains in positive territory.
Technical analysis and price prediction of BEZ stock
At present, the stock is in a downtrend and it is confirmed by the bearish crossover between the EMAs back on June 23. At the time of writing, the BEZ stock price is trading at a level of £549 as the bulls are trying to get past the immediate resistance level of £563 and go towards the 2nd resistance of £595.
In addition to this, the BEZ stock price has support levels at £506 and £471 for the immediate and 2nd support, respectively. However, the 2nd support level has not been test since July 2022.
On the other hand, the 50 EMA rejected the bulls during June this year, which resulted in a negative trend. At present, the 50 EMA is at £550 while the 200 EMA is at £574
Furthermore, the MACD indicator is in an uptrend as a result of a bullish crossover with its EMA back at the start of August. At present, the MACD line is at 0.31 while its EMA is at -1.14. The RSI is also showing an uptrend after touching its oversold levels of 30 back in August. At present, the RSI is at 53, which means that it is in neutral territory.
Conclusion
From a long-term investment perspective, BEZ stock is performing great financially. And the firm is somehow maintaining regular dividends with good revenue growth, along with a positive cash flow. Although the price-to-earnings ratio of the firm is a little high, it is still worth investing in the long term.
On the other hand, the traders can place their bets. If the stock crosses its immediate resistance level of £563 with a target of £595. Long trade participants should be mindful of the 50 EMA level. As it could potentially act as a resistance point against the bulls. In the event of a reversal, the stock may retreat towards its support level of £506.
Technical levels
Support: £506, £471
Resistance: £563, £595
Disclaimer
The views and opinions stated by the author, or any people named in this article, are for informational purposes only. They do not establish financial, investment, or other advice. Investing in or trading crypto assets comes with a risk of financial loss.