Insurance provider Just Group (LSE: JUST) has had a good run over the past year. Its share price is up 80%. While many shares have seen a price rise over the past year, of the ones I have covered this is among the biggest increases.
Just Group reports a loss
Investors were clearly not pleased with its results yesterday, though. It fell by 7.5% and went right back to being a penny stock. The reasons are not hard to see. The company reported a statutory loss before tax for the half-year ending 30 June, compared to a profit for the comparable period last year.
Also, this is not the first time that Just Group has reported a loss. In 2018, it had sunk into a loss. And it has made inconsistent profits since.
Adjusted numbers look better
But there are positives in its results as well. It has reported an increased adjusted operating profit from last year. Adjusted numbers are important, because they indicate how the underlying business is performing.
This can sometimes get obfuscated by statutory numbers that can include items meant for official purposes like tax estimation. This is not to de-emphasise the significance of statutory numbers, but only to say that there can be different sides to the same financial reports.
What is the outlook?
Just Group is confident that it can deliver profitable growth over time. But going by the fact that there is now a gap between its expectations during its last update and the actuals, I am taking this with a pinch of salt.
At the same time, there is little denying that the long-term outlook for the stock can still be strong, considering its focus on retirement solutions. With increased life expectancy and rising income levels, I reckon the business can hold Just Group in good stead.
What’s next for the Just Group share price
For now, though, I am not sure if this penny stock can show a sustained rise over time. Its long-term share price trajectory is not encouraging either, what with all its peaks and troughs. Moreover, it does not pay dividends either. And considering that it just reported losses, they are unlikely in the near future as well.
If I have to choose to invest from among insurers, I reckon I am better off considering FTSE 100 ones like Legal & General and Aviva. Not only has their share price movement been more stable in recent times, they also pay a fairly hefty dividend.
Legal & General has a dividend yield of 6.5%, while that for Aviva is around 5%. In comparison, the average dividend yield for the FTSE 100 index is 3.3%. Moreover, Legal & General’s latest results have been strong too.
What I’d do
In sum, as things stand, Just Group does appear weak to me in comparison to other insurers. This can change. I think its target market could be a huge positive for it over time. But for now, it is on my watchlist.
