Tag: Stock pick

Steadfast Group Ltd (ASX: SDF) shares are having a tough session on Wednesday.

In afternoon trade, the insurance broker network’s shares are down 5% to $5.10.

Why are Steadfast shares sinking today?

Today’s decline appears to have been driven by the release of a broker note out of Macquarie Group Ltd (ASX: MQG) this morning.

Macquarie has been looking into the industry and highlights that commission rate cuts are accelerating. It said:

Our market analysis has uncovered an accelerating pace of commission rate cuts. Although Home and Personal Motor products are generally not profitable for insurance brokers, as these products are pushed into the direct channel, we are concerned customer retention for Business Package could deteriorate.

In addition, the broker thinks that the weakness in premium rates that Steadfast has been battling could stay for longer than previously expected. It adds:

We now forecast weakness to last longer than the next 12 months, putting pressure on SDF’s ability to hub their wholly owned insurance brokers, which has not necessarily been successful in the past.

This comes at a time when the ASX 200 stock has announced a change of leadership, which is something Macquarie notes can weigh on the performance of a share price. The broker explains:

Our ESG analysts recently reviewed stock price performance for companies undergoing executive changes. 12-month underperformance was witnessed across founder exits, internal replacements and ESG related exits.

Downgraded

In light of the above, this morning Macquarie has downgraded Steadfast shares to a neutral rating (from outperform) and slashed its valuation to $4.90 (from $7.00). This is a touch below where its shares are currently trading.

Commenting on its downgrade and new valuation, the broker said:

Downgrade to Neutral (from Outperform). As commission rates fall and the premium rate cycle threatens to be softer for longer, we downgrade our recommendation to Neutral (from Outperform).

Valuation methodology change: In addition to changing our PERel/DCF methodology to PERel only as the premium cycle slows, we now incorporate a 25% discount reflecting: #1) heightened regulatory attention for Strata, ACCC M&A intervention; ASIC insider trading investigation; #2) increased weight applied to cost-out as the premium rate cycle slows, something which has not been successful in the past; and #3) long term succession risk of the Group CEO at the same time as the CFO and Chair have exited.

The post Why are Steadfast shares sinking 5% today? appeared first on The Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has positions in and has recommended Macquarie Group and Steadfast Group. The Motley Fool Australia has positions in and has recommended Macquarie Group and Steadfast Group. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The S&P/ASX 200 Index (ASX: XJO) is up a slender 0.05% in early afternoon trade, but it’s not getting any help from these three ASX 200 stocks that are all plumbing 52-week-plus lows today.

Here’s what’s happening.

ASX 200 stocks sinking to 52-week-plus lows

The first company trading at one-year lows today is News Corp (ASX: NWS).

Shares in the diversified media conglomerate are down 0.3% at the time of writing, trading for $44.10. That’s the lowest price since early November last year, with News Corp shares having closed in the red for the previous six trading days.

That selling follows a positive response to the ASX 200 stock’s first-quarter (Q1 FY 2025) update, released on 7 November.

News Corp shares closed up 3% on the day, with the company reporting a 2% increase in revenue for the quarter to US$2.14 billion. Earnings before interest, taxes, depreciation and amortisation (EBITDA) were up 5% to US$340 million.

Moving on to the second ASX 200 stock plumbing to one-year lows, we have Guzman Y Gomez (ASX: GYG).

Shares in the Mexican fast-food restaurant chain are down 4.2% at the time of writing, changing hands for $22 apiece. That’s certainly unwelcome news to shareholders. Though not to the raft of short-sellers betting against the stock. Guzman Y Gomez shares are the sixth most shorted on the ASX this week, with a short interest of 11.8%.

Guzman Y Gomez began trading on the ASX on 20 June 2024, and shares are now at the lowest level since the company listed.

Which brings us to…

Also plunging to new all-time lows

The third ASX 200 stock marking new 52-week plus lows is TPG Telecom Ltd (ASX: TPG).

Shares in Australia’s third-largest telecommunications company are down 4% in afternoon trade today, at $3.65 each, after exiting Monday’s trading halt. That marks a new all-time low for the stock.

TPG Telecom shares are under pressure today after the company announced it had raised $300 million through an Institutional Reinvestment Plan. TPG issued about 83 million new shares for $3.61 each. That’s a 5% discount to last Friday’s closing price of $3.81.

Speaking of last Friday, the ASX 200 stock closed down a precipitous 31.1% on the day.

However, as the Motley Fool’s James Mickleboro noted on the day, the sell-down wasn’t nearly as tough for existing shareholders as you might think.

That’s because TPG Telecom traded ex-dividend on Friday for an outsized capital return. That was comprised of a $1.52 per share capital reduction and a 9-cent per share unfranked dividend.

That saw investors achieve a whopping 28.8% yield relative to the previous day’s closing price.

The post 3 ASX 200 stocks plumbing 52-week lows today appeared first on The Motley Fool Australia.

More reading

• Why Ausgold, DroneShield, EML, and TPG shares are falling today
• TPG Telecom raises $300m in Institutional Reinvestment Plan
• Brokers say buy: 3 ASX 200 shares at 52-week lows today
• TPG Telecom provides Triple Zero update and investor plan progress
• Why are TPG Telecom shares in a trading halt today?

Motley Fool contributor Bernd Struben has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.