Eyes Down For Legal & General Group Plc’s Results

It should be another good year for Legal & General Group Plc (LON: LGEN).

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The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

LPound Coinsegal & 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.

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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.

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