Admiral Earnings: Admiral Continues To Demonstrate Its Competitive Advantage With Pricing Progress

At a broad level, we believe Admiral has reported results for the first six months of the year that are in line with our full-year forecasts. However, the shape of the results within each line of business is different from what we have forecast. Admiral has delivered profit before tax of GBP 233.9 million year to date, or GBX 57.6 in earnings per share, versus our GBP 468.1 million and GBX 1.16 in profit before tax and earnings per share for the full year, respectively. Admiral’s year-to-date figures imply a profit before tax and EPS of GBP 467.8 million and GBX 1.15. We think that EPS is however below that of the GBX 123.47 as per Refinitiv collected consensus. With shareholders’ equity of GBP 928.6 million, Admiral has delivered a 39% return to shareholders, higher than the 36% return on equity delivered in last year's first six months. That means Admiral is currently looking a lot better than our 35.2% full-year ROE forecast. We apply a 9% cost of capital to Admiral and so we maintain our rating of narrow economic moat. We also maintain our GBP 30.7 per share estimate of fair value as we look to be about right on our full-year forecasts.