NIB earnings watch: 4 things you need to know before 2019 results

According to the Wall Street Journal analysts have taken a bearish view on nib in recent times – with a consensus underweight rating being assigned to the stock ahead of FY19 results.

When are nib's results due?

NIB Holdings Ltd is expected to announce its 2019 full-year results to the market this coming Monday, August 19.

The outlook remains challenging

When NIB Holdings Ltd reported its half-year results in February, the company used consistently conservative language in describing its FY19 outlook.

Speaking of this outlook, Managing Director Mark Fitzgibbon said, 'nib does not anticipate the second half of FY19 to be as strong as the first.’

Mr Fitzgibbon further added that:

‘Key factors expected are unfavourable claims seasonability, the fact that the first half was boosted by a claims provision release within arhi and likely weak market conditions affecting parts of the Group.'

Across the Australian, Chinese and New Zealand business segments, nib raised a number of specific concerns. In China for example, the company noted that it’s ‘not expected to be profitable until FY22.’

More locally, nib flagged that the:

‘Australian market remains tepid but with near term market agitation and growth opportunity due to reforms.’

Speaking of nib’s upcoming full-year results, wealth management firm Morgans made the point that:

‘While the second half is seasonally weaker for claims, FY19 UOP guidance still seems conservative given the 1H19 performance (~A$114m).’

First-half fundamentals were good

Though NIB Holdings Ltd's management and Morgans have flagged seasonality concerns for the 2019 full-year results, nib’s financials in the first-half were impressive.

Here, the company reported total group revenues of $A1.2 billion – a solid increase of 10.2% from the previous half.

The company also saw significant gains in its underlying earnings – rising 18.6% to A$114.3 million in the first-half.

nib’s interim dividend was also up in 1H19– gaining 11% on the corresponding period to 10 cents per share.

According to the ASX, nib currently has a dividend yield of 2.78%.

nib share price: what do analysts think?

As it stands, the analyst outlook is a negative one for nib (ASX: NHF). This is hardly a surprise when you consider management’s comments surrounding the soon-to-be released FY19 results.

For example, the Wall Street Journal notes that of the ten analysts covering the stock, not one rates it a buy. Overall, nib (ASX: NHF) has an underweight rating.

Mind you, irrespective of these bearish views, NIB Holdings Ltd has significantly outperformed the ASX 200 in the 2019 calendar year, rising 47% in that period.


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