- Revenue, profit reach record highs in H1
- AuA up 43 per cent, ahead of some forecasts
- Outlook uncertain given impact of Royal Mail float
The share price of Hargreaves Lansdown sank sharply on Wednesday despite the fund manager and brokerage firm reporting a record first half, as the stock pulled back after its impressive recent run.
The company´s indications that the second half may be "a little unusual" is likely to have added to the downwards pressure on the shares
which had risen nearly 28% over the past three months and have doubled over the last year.
In that regard, analysts at both Numis and Cannacord Genuity pointed out how the stock was changing hands at a price-to-earnings multiple towards 40 - which the latter described as 'high' - albeit while at the same time delivering largely positive verdicts on the company´s performance.
Hargreaves hiked its interim dividend by 11% to 7p per share after saying that most parts of the business reported figures at an all-time high during the period.
Revenue totalled £158.4m in the six months to December 31st, up 13% year-on-year, while pre-tax profit rose 11% to £104.1m.
This was helped by a 43% increase in assets under administration (AuA) to £43.4bn compared with last year, with net business inflows up 70% at £2.8bn.
Analysts at Numis Securities had predicted AuA would come in at £41.8bn.
"We are pleased that Hargreaves Lansdown's results once again show substantial growth in new clients, assets, revenue and profit," said Chief Executive Ian Gorham.
Hargreaves said that client recruitment surpassed expectations with the company now having 584,000 investors as active clients, up 15% or 77,000 since the start of the financial year.
However, of these new investors, the company said around 27,000 have currently confined their activity exclusively to the Royal Mail float which listed on the stock market in October. It said it expects "many of these" will become wider investors in future.
"A little unusual ..."
Looking ahead to the second half, the company said that January delivered a "positive start".
However, while the company's full-year results are normally second half-weighted, it said this year may turn out to be "a little unusual", given that the Royal Mail event occurred in the first half of the year.
"There is no doubt the second half of the year will again be key to our full-year performance."
Numis reiterated its 'hold' rating for the stock after the results. The broker said that while the company continues to perform well operationally its shares are trading at 41 times prospective earnings.
In a similar vein, Canaccord Genuity explained to clients that: "this is a high valuation even if regulators had not forced a change in revenue generation."
"[...] Over the next twelve months we expect net inflows to continue to be strong, but forecasts to be trimmed and the share price momentum to fade."
The stock was down nearly 6% at 1,407.66p by 10:04.