CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure. CFDs are a leveraged product and can result in losses that exceed deposits. Please ensure you fully understand how CFDs work and what their risks are, and take care to manage your exposure.

Saga share price: 5 things to watch out for in its full-year results

The last 12 months have been tough for the travel and insurance group, with the company seeing its share price fall to a record low in 2018, but investors have reasons to be more optimistic.

Saga will publish its full-year 2018 results on April 4, covering the 12-month period to 31 January 2019, with investors eager to see how the company plans to drive growth after what has been a disappointing year of trading.

Low earnings expectations

Saga is expected to report headline earnings per share of 13.1p, representing a 4% increase compared with the previous year.

However, revenues are forecast to fall by 1.5% to £847 million and earnings are expected to decline in 2019 and 2020, as the performance of its overall business continues to struggle, despite the group’s travel unit remaining relatively strong.

Profit warnings

Saga issued a profit warning in late-2017 and the group has struggled to regain the ground it lost over the course of 2018, with investor sentiment remaining subdued despite a slight boost to sales volumes.

In a bid to improve its performance, Saga Group’s CEO Lance Batchelor has concentrated on driving new business at the expense of margins, a move that flies in the face of the insurance industry at large.

Saga maintains its strong brand loyalty

Insurance is a business dominated by loyalty. Despite the push for consumers to become more aware of the advantages conveyed by switching providers, plenty of people still stick with the same policies.

Saga’s position as a key provider of insurance to the over-50s provides it with a degree of branding and identification that other firms envy and will provide the company with much needed stability as it takes the steps it needs to take to ensure its future.

Investors fear earnings impact on dividends

Considering its recent run of bad form, many investors are concerned that if the company’s earnings continue to take hits, it will result in the management slashing its dividend payouts.

However, despite the many challenges the business faces it has manged to maintain strong cash generation, which is helping the company to reduce the amount of debt on its balance sheet, which has helped stop dividends sliding in recent years.

Furthermore, the firm has seen a notable pickup in cruise bookings, with more than half of the space available on the new cruises already booked, despite the fact that one ship has only just entered service, and another is not to enter the market until the summer of 2020.

Saga targets long-term recovery

It has been a tough couple of years for Saga, but perhaps things are looking better. In any case, with a low valuation and a more interesting technical outlook, investors are starting to look more optimistically at the company. There is still a lot to be done, but the shares seem to offer better value now than they did back in 2017.

This information has been prepared by IG, a trading name of IG Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
CFDs are a leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.

Be ready to act on ECB opportunities

Learn how the ECB’s monetary policy announcements affect interest rates and price stability ahead of its next meeting in 22 April 2021.

  • How might the next meeting affect the markets?
  • What are the key rate decisions to watch?
  • Why is the Governing Council announcement important for traders?

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

Plan your trading week

Get the week’s market-moving news sent directly to your inbox every Friday. The Week Ahead gives you a full calendar of upcoming economic events, as well as commentary from our expert analysts on the key markets to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.