Challenger (ASX:CGF) - Share price, News & Analysis

CGF fundamental analysis
Snowflake Score
Valuation	4/6
Future Growth	0/6
Past Performance	2/6
Financial Health	6/6
Dividends	4/6

CGF Stock Overview

Challenger Limited is a publicly owned investment manager.

Rewards

Trading at 8.5% below our estimate of its fair value

Became profitable this year

Risk Analysis

Earnings are forecast to decline by an average of 2.9% per year for the next 3 years

Unstable dividend track record

Challenger Peers

ClearView Wealth

ASX:CVW

AU$489.2m

Netwealth Group

ASX:NWL

AU$3.1b

Magellan Financial Group

ASX:MFG

AU$2.9b

Argo Investments

ASX:ARG

AU$7.0b

Price History & Performance

Summary of all time highs, changes and price drops for Challenger
Historical stock prices
Current Share Price	AU$7.30
52 Week High	AU$7.73
52 Week Low	AU$4.86
Beta	0.89
1 Month Change	5.64%
3 Month Change	17.74%
1 Year Change	49.59%
3 Year Change	-10.98%
5 Year Change	-43.10%
Change since IPO	186.27%

Shareholder Returns

	CGF	AU Diversified Financial	AU Market
7D	-0.3%	-2.6%	-2.1%
1Y	49.6%	23.7%	0.5%

Return vs Industry: CGF exceeded the Australian Diversified Financial industry which returned 23.7% over the past year.

Return vs Market: CGF exceeded the Australian Market which returned 0.5% over the past year.

Price Volatility

Is CGF's price volatile compared to industry and market?
CGF volatility
CGF Average Weekly Movement	5.5%
Diversified Financial Industry Average Movement	6.0%
Market Average Movement	9.4%
10% most volatile stocks in AU Market	16.5%
10% least volatile stocks in AU Market	4.3%

Stable Share Price: CGF is less volatile than 75% of Australian stocks over the past 3 months, typically moving +/- 6% a week.

Volatility Over Time: CGF's weekly volatility (6%) has been stable over the past year.

About the Company

Founded	Employees	CEO	Website
1985	735	Nick Hamilton	https://challenger.com.au

Challenger Limited is a publicly owned investment manager. The company also provides retirement services to its clients. It manages equity mutual funds.

Challenger Fundamentals Summary

How do Challenger's earnings and revenue compare to its market cap?
CGF fundamental statistics
Market Cap	AU$4.93b
Earnings (TTM)	AU$651.50m
Revenue (TTM)	AU$3.53b

7.6x

P/E Ratio

1.4x

P/S Ratio

Is CGF overvalued?

See Fair Value and valuation analysis

Earnings & Revenue

Key profitability statistics from the latest earnings report
CGF income statement (TTM)
Revenue	AU$3.53b
Cost of Revenue	AU$1.96b
Gross Profit	AU$1.57b
Other Expenses	AU$920.30m
Earnings	AU$651.50m

Last Reported Earnings

Dec 31, 2021

Next Earnings Date

Aug 16, 2022

Earnings per share (EPS)	0.96
Gross Margin	44.50%
Net Profit Margin	18.44%
Debt/Equity Ratio	139.7%

How did CGF perform over the long term?

See historical performance and comparison

Dividends

3.2%

Current Dividend Yield

23%

Payout Ratio

New valuation analysis is now available for all ASX stocks. This is in beta.

Future Growth

How is Challenger forecast to perform in the next 1 to 3 years based on estimates from 11 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Future ROE

-2.9%

Forecasted annual earnings growth

Earnings and Revenue Growth Forecasts

Analyst Future Growth Forecasts

Earnings vs Savings Rate: CGF's earnings are forecast to decline over the next 3 years (-2.9% per year).

Earnings vs Market: CGF's earnings are forecast to decline over the next 3 years (-2.9% per year).

High Growth Earnings: CGF's earnings are forecast to decline over the next 3 years.

Revenue vs Market: CGF's revenue is expected to decline over the next 3 years (-4.5% per year).

High Growth Revenue: CGF's revenue is forecast to decline over the next 3 years (-4.5% per year).

Earnings per Share Growth Forecasts

Future Return on Equity

Future ROE: CGF's Return on Equity is forecast to be low in 3 years time (9%).

Past Performance

How has Challenger performed over the past 5 years?

Past Performance Score

2/6

Past Performance Score 2/6

Quality Earnings
Growing Profit Margin
Earnings Trend
Accelerating Growth
Earnings vs Industry
High ROE

-8.2%

Historical annual earnings growth

Earnings and Revenue History

Quality Earnings: CGF has high quality earnings.

Growing Profit Margin: CGF became profitable in the past.

Past Earnings Growth Analysis

Earnings Trend: CGF's earnings have declined by 8.2% per year over the past 5 years.

Accelerating Growth: CGF has become profitable in the last year, making the earnings growth rate difficult to compare to its 5-year average.

Earnings vs Industry: CGF has become profitable in the last year, making it difficult to compare its past year earnings growth to the Diversified Financial industry (40.1%).

Return on Equity

High ROE: CGF's Return on Equity (16%) is considered low.

Financial Health

How is Challenger's financial position?

Financial Health Score

6/6

Financial Health Score 6/6

Short Term Liabilities
Long Term Liabilities
Debt Level
Reducing Debt
Debt Coverage
Interest Coverage

Financial Position Analysis

Short Term Liabilities: CGF's short term assets (A$24.8B) exceed its short term liabilities (A$3.9B).

Long Term Liabilities: CGF's short term assets (A$24.8B) exceed its long term liabilities (A$21.8B).

Debt to Equity History and Analysis

Debt Level: CGF has more cash than its total debt.

Reducing Debt: CGF's debt to equity ratio has reduced from 225.7% to 139.7% over the past 5 years.

Debt Coverage: CGF's debt is well covered by operating cash flow (54.3%).

Interest Coverage: CGF's interest payments on its debt are well covered by EBIT (3.4x coverage).

Balance Sheet

Dividend

What is Challenger current dividend yield, its reliability and sustainability?

Dividend Score

4/6

Dividend Score 4/6

Notable Dividend
High Dividend
Stable Dividend
Growing Dividend
Earnings Coverage
Future Dividend Coverage

3.15%

Current Dividend Yield

Dividend Yield vs Market

Notable Dividend: CGF's dividend (3.15%) is higher than the bottom 25% of dividend payers in the Australian market (2.57%).

High Dividend: CGF's dividend (3.15%) is low compared to the top 25% of dividend payers in the Australian market (6.13%).

Stability and Growth of Payments

Stable Dividend: CGF's dividend payments have been volatile in the past 10 years.

Growing Dividend: CGF's dividend payments have increased over the past 10 years.

Earnings Payout to Shareholders

Earnings Coverage: With its low payout ratio (22.7%), CGF's dividend payments are well covered by earnings.

Cash Payout to Shareholders

Cash Flow Coverage: With its low cash payout ratio (5.1%), CGF's dividend payments are thoroughly covered by cash flows.

Next Steps

Explore strong dividend paying companies in the Diversified Financials industry.

Management

How experienced are the management team and are they aligned to shareholders interests?

1.3yrs

Average management tenure

CEO

Nick Hamilton

0.33

Tenure

AU$1,695,412

Compensation

Mr. Nicolas Hamilton, also known as Nick, serves as MD, Director and CEO at Challenger Ltd. since January 1, 2022. He served as Chief Executive of Funds Management at Challenger Ltd.from September 23, 201...

CEO Compensation Analysis

Compensation vs Market: Nick's total compensation ($USD1.17M) is below average for companies of similar size in the Australian market ($USD2.00M).

Compensation vs Earnings: Nick's compensation has been consistent with company performance over the past year.

Leadership Team

Experienced Management: CGF's management team is not considered experienced ( 1.3 years average tenure), which suggests a new team.

Board Members

Experienced Board: CGF's board of directors are considered experienced (4 years average tenure).

Ownership

Who are the major shareholders and have insiders been buying or selling?

Insider Trading Volume

Insider Buying: CGF insiders have bought more shares than they have sold in the past 3 months.

Recent Insider Transactions

Ownership Breakdown

Dilution of Shares: Shareholders have not been meaningfully diluted in the past year.

Data	Last Updated (UTC time)
Company Analysis	2022/05/16 00:00
End of Day Share Price	2022/05/16 00:00
Earnings	2021/12/31
Annual Earnings	2021/06/30