For 20 years, before and after the global financial crisis, LGGNY was valued by income investors at 10.5 to 12 times earnings. Profit coverage: With its reasonable payout ratio (52.4%), LGEN`s dividend payments are covered by income. In addition to operating income, EPS and dividend, I really like the fact that L&G continues to achieve an ROE of over 20%. In addition, the solvency ratio increased to 212% thanks to higher interest rates. It`s a number that attracted a lot of attention during the Q&A session of the last conference call. In fact, this means that L&G has a large cushion to absorb any type of shock, as shown in the slide below, which points out that even a large credit event would still leave L&G`s solvency ratio at 190%. I guess LGGNY is historically worth about 11X profit and trades at just 6.1X today. L&G is able to achieve domestic and international growth and deliver predictable long-term value creation. In fact, it has a very long-term business with a customer loyalty of about 30 to 40 years, with income driven by a growing stock of accumulated assets. Profit relative to savings: LGEN`s projected profit growth (3.5% per annum) is higher than the savings rate (0.9%). In addition to a leading position in the UK, the company is also expanding in the US and internationally. In 2020, Legal & General sold its non-life insurance business to Allianz and said it would use the funds to reinvest in its core asset management and pension fund businesses.
What is LGEN`s P/E ratio to its equitable P/E ratio? This is the expected P/E ratio, taking into account the expected growth in earnings, profit margins and other risk factors of the company. Accelerated growth: LGEN`s earnings growth last year (1%) was below the 5-year average (3.9% per year). Steady earnings growth outside of this year`s decline (mainly currency-related) with a continued dividend increase per year. Demographics in particular play an important role, as highlighted in the conference call: Profit vs. market: LGEN`s profits (3.5% per annum) are expected to grow more slowly than the UK market (8.9% per annum). Is the company growing or are sales and profits expected to decline in the coming years? “The performance of the investment market and the conditions of the economy as a whole can have a negative impact on earnings, profitability or excess capital.” High growth gains: LGEN`s profits are expected to increase, but not significantly. And when the “dust” settles, I can guarantee you that the fear and complete panic we`ve seen in recent years will quickly evaporate. LGGNY is anti-prime price bubble with growth of -5%, but growth of 6.5%. This is what happened in the United Kingdom, where some truly surprising government decisions, which were partially reversed but only added to the confusion, led to chaos in the financial markets.
This backdrop of chaos and confusion has sent LGGNY to valuations seen only during the pandemic and the Great Recession. Certain trends to which the company is exposed are at the origin of its growth. I would like to highlight the three most important for me: UK long-term bonds have plunged as much as 50% in 2 days I think this could be the key that could lead to a share price starting to move in line with EPS. If the company focuses on investing with an ROE above 20%, we should see a real composition over time, which sooner or later will no longer be overlooked by investors. To smooth out outliers, analysts` margins of error are 25% up and 20% down. Share dilution: Shareholders were not significantly diluted last year. Current liabilities: LGEN`s current assets (£77.4 billion) do not cover current liabilities (£86.0 billion). Join iREIT on Alpha today for the most in-depth research covering REITs, mREITs, Preferreds, BDCs, MLPs, ETFs, builders, asset managers, and we`ve added Prop Tech SPACs to our product line. How do you quantify, monitor and track such a complex risk profile? By doing what the big institutions do. Strong revenue growth: LGEN`s revenue (57.8% per year) is expected to grow faster than 20% per year.
The most important things S&P looks at for LGGNY and asset managers include things like: What is the experience of the management team and are they aligned with shareholder interests? Then the price will recover quickly and that incredible safe 9.2% yield will fall sharply and quickly. Every bear market is different, created by a unique combination of risk factors that make investors panic at the thought of selling even the best companies in the world. Everyone says they want to be like Buffett and “be greedy when others are afraid.” Well, this is your chance. “New entrants can disrupt the markets in which we operate.” Debt coverage: LGEN`s debt is not well covered by operating cash flow (18.2%). Since then, the British Chancellor of the Exchequer (Treasury) has been sacked. LGGNY`s overall risk has declined over the past week and has risen only marginally in recent months before financial chaos swept across the UK. and the bond market for real-time fundamental risk assessment Legal & General Group Plc announced an interim dividend of 5.44 pence, up 5% year-on-year (5.18 pence). The ex-dividend date (interim dividend 2022) is August 18, 2022. The record date is August 19, 2022. The dividend payment date is September 26, 2022.
The more I look at these trends, the more convinced I am of the health of this company. In particular, I think a sign of Legal & General`s strength is that it has been one of the few companies in the financial sector that hasn`t suspended or reduced its dividend during the pandemic. Another fact that investors should consider is that earnings per share are not supported by a decreasing number of outstanding shares. Management is forecasting growth of 8% to 9% and analysts are more cautious, expecting a CAGR of 6.5% over the long term. There are 5 new directors who have joined the Board in the last 3 years. Carolyn Johnson, a non-executive independent director, was the last director to join the board, taking office in 2022.