Shares in diversified wealth management company IOOF Holdings Limited (ASX: IFL) have fallen over 3% today after the $3 billion company reported a jump in its half yearly profit. This profit growth was helped along by a $16.3 million contribution from the acquisition of SFG Australia.
Similar to peers such as Perpetual Limited (ASX: PPT), BT Investment Management Ltd (ASX: BTT) and AMP Limited (ASX: AMP), IOOF experienced solid performance across most of its business units which offer a wide spectrum of services including wealth management, superannuation, estate planning and corporate trustee.
Here's what happened:
- Revenues rose 34% to $458.5 million
- Underlying net profit after tax (NPAT) but pre-amortisation jumped 39% to $80.6 million
- On an underlying earnings per share basis, the group achieved a 15% increase to 29 cents per share (cps)
- An 11% increase in the fully franked interim dividend to 25 cps was declared. Shareholders can expect to receive payment on 10 April.
- Funds under Management, Advice and Administration (FUMA) increased 26% to $118.7 billion
- Net debt increased to $74 million but remained manageable with a debt-to-equity ratio of just 13.3%
Buy, Hold or Sell?
With IOOF's business in good shape and the group offering exposure to Australia's growing pool of superannuation savings and demand for financial services, the company would appear to be worth considering for a diversified, long-term portfolio.
The company offers an attractive income to shareholders as it trades on a dividend yield of approximately 5%. Assuming a second half performance in line with the first half, annualising the underlying earnings per share implies the stock is currently trading on a price-to-earnings ratio of 17.7x.
