Eyes Down For Legal & General Group Plc’s Results

Legal & General (LSE: LGEN) (NASDAQOTH: LGGNY.US) shareholders have had a pretty good recession — while others in the financial sector were struggling, they saw their investment bring home steady dividend income and a strong share-price rise.

While the FTSE 100 has fallen short of doubling over the past five years, Legal & General shares have seven-bagged to 244p today! And on top of that, there have been nice dividend yields of 5% and better to add to the pot.

Results next week

But what is expected from full-year results to December 2013, expected on Wednesday 5 March?

City analysts are expecting a modest 1% rise in pre-tax profit to £1.22bn, but earnings per share (EPS) should be up 14% from 2012’s 13.9p.

And the dividend? Well, the yield is falling to around 4% due to share-price appreciation, but the annual payment is predicted to rise by 20% to 9.2p per share — and we’ve already seen a 22% boost for the first-half dividend to 2.4p.

Strong performance

At the time, chief executive Nigel Wilson said “Legal & General delivered another very strong performance in H1 2013, with double-digit growth in sales, cash, operating profits and profit after tax“, and outlined the firm’s strategy “based on cash plus growth plus selective acquisitions“.

Operational cash generation was up 14% to £537m, with pre-tax profit up 13% to £592m. EPS gained 13% to 7.82p.

And we saw a return-on-equity figure of 16.8%, up from 15.8% at the halfway stage the previous year.

Things were continuing strongly by the time Q3 came around, with operational cash generation now up 11% to £780m, and total assets under management up from £433bn to £443bn. Gross inflows and premiums were said to be “well ahead of 2012“.

Shares still looking good

Those 2013 profits are looking safe, then, with earnings expectations putting the shares on a P/E of 15.4. But with a further 8% EPS growth forecast for the next two years and with dividends adequately covered, the shares are looking reasonable value to me, even though they’re up more than 50% over the past 12 months.