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Just Group, a financial services stock specializing in retirement income products, has seen its share price rise significantly following the release of its latest financial results. The company, which is part of the FTSE 250, reported a substantial increase in its first-half underlying operating profit, sparking interest among market participants. As of today, the stock is trading with a price-to-earnings (P/E) ratio of 4.2, indicating a valuation that some may find appealing within its sector.
Solid Financial Performance
The company's first-half results revealed a 44% increase in underlying operating profit, reaching £249 million. This strong performance contributed to a 16.87% rise in Just Group's share price today. The ticker, (LSE: JUST), has shown a notable 12-month return of 41.96%, reflecting a positive trajectory over the past year.
Just Group, which focuses on later-life products such as annuities and equity release lifetime mortgages, benefited from a significant rise in new business sales. Retirement income sales grew by 30%, reaching £2.5 billion, while improved pricing discipline and risk selection helped widen margins to 9%. This growth has come as the demand for retirement income solutions continues to rise, particularly as the population ages and traditional state support systems face challenges.
Strong Capital Position
The company's capital coverage ratio stands at a robust 196%, indicating strong financial stability. Cash generation before new business remained steady at £49 million, and the return on equity improved to 15.6%. Additionally, Just Group reported an increase in tangible net assets per share to 240p, providing a substantial cushion relative to its current share price, which hovers around 137p.
In terms of shareholder returns, Just Group announced a 20% increase in its interim dividend, raising it to 0.7p per share. While the yield remains relatively low at 1.52%, the company’s commitment to increasing payouts may be seen as a positive sign for those monitoring its performance.
Outlook
CEO David Richardson expressed confidence in the company's future, stating that Just Group expects to "substantially exceed" its previous 2024 guidance of doubling its 2021 operating profit of £211 million within three years. The market reacted positively to this optimism, with investors showing continued interest in the stock.
While new business volumes are anticipated to climb in the second half of the year, there may be some narrowing of margins due to shifts in the business mix. However, the company's strong performance in the first half has positioned it well for potential future challenges.
