Aldermore Share Discussion Threads

[isaready] 28/6/2016 13:54

looking good

[betelgeuse1] 28/6/2016 12:30

Numis say this

Following better than expected results for 2015 we are upgrading our EPS estimate for this year by 5% to 26.9p from 25.7p. The upgrade would have been more but for adjustments to the number of shares in issue and the group tax charge. As a result of these our EPS estimate for next year falls 2% to 32.0p from 32.7p. Excluding the impact of shares and tax our 2017 estimates would have increased modestly.

So EPS of 26.9p this year and 32.7p next year

PER of 3.5

GONNA DOUBLE. IM IN :P

[betelgeuse1] 28/6/2016 12:26

Liquid
Bit of a mistruth you say there


Shawbrook confirms that trading has been in line with guidance given at the Investor Day, 5(th) May 2016, with Q2 2016 originations flat on Q1 2016 and up c.35% on Q2 2015.


So year on year growth is 35%

[liquidkid] 28/6/2016 12:24

On the back of SHAW statement of a flat Q2 over Q1
one borker downgraded the whole challenger bank sector to SELL.
If there is a bounce it's going to be a dead cat one.

[isaready] 28/6/2016 11:00

I expect some money to be made on some stocks over the next few weeks. This will bounce, very high.

[dlku] 27/6/2016 22:24

should see some recovery tomorrow considering stateside Dow finished 1% better off than our own FTSE. Expect to see some of those shorts closing so might even see a coiled spring effect. Way oversold and if you consider the bank doesn't depend off the inter-bank money market for funding and the mainstay of it's business is domestic it's de-risked by these factors.

[rl34870] 27/6/2016 18:19

Looking at the last annual report they take a very prudent approach to risk . Presumably if the average loan to value ratio on their buy to let loan book is about 65% then they are not going to take the first 35% hit in the event of a house price collapse. Is my understanding of that correct?

[bad robot] 27/6/2016 17:03

Warning 0p




IN BR WE TRUST

[reddave999] 27/6/2016 13:58

Thank you for that Masurenguy for being helpful, unlike some idiots on here.

[masurenguy] 27/6/2016 11:25

Any comparisons with B & B and Northern Rock are absurd. They had totally different financial structures, substantial overheads from a chain of High St branches and other legacy issues that do not apply to ALD where residential mortgages only represent 50% of their business.

At the end of last year end ALD had a loan book of £6.1bn and deposits of £5.7bn. The current year forecasted eps is circa 27p which at todays price puts them on a PER of circa 4.5 but the lack of any dividend makes them a less attractive hold when the market is unstable as is the current case.

[bigboots] 27/6/2016 10:47

Does Bradford and Bingley and Northern Rock ring bells with investors here !!!!

[deanroberthunt] 27/6/2016 07:29

It doesn't help...

aNOTHER 10-15% OFF THIS AND IT'S WORTH A lONG PUNT, FOR A WHAM BAM THANK YOU MAAM

[bad robot] 26/6/2016 16:39

I may buy some at 15p for the dead cat bounce to 25p


Hope this helps

[cantrememberthis2] 24/6/2016 22:55

Yep...but lots of people forget the UK will always be in vogue for finance, trade, education, medicine etc. As if voting out means no one will want to come over to theUk or invest. So ALD and banks hammmered but this has always been lukrlurking as a possibility since Feb 16.

[keya5000] 24/6/2016 22:01

I work in residential development funding, think Aldermore are quite exposed to the small/medium sized regional builders.

Often on projects that the big guys will not fund, not really poor standard but not the top zero risk profile.

Can only think that this and the perhaps tightening of its funding going forward if that loan book weakens is the reason?

[cantrememberthis2] 24/6/2016 21:54

Exposure to BTL and residential mortgages - focused hence drop...gone in heavy at £1.60, will load up into this and VM.

GLA

[mazarin] 24/6/2016 17:20

Thanks dlku and for the record I believe they all predate the last upbeat Trading update. Admittedly it's been a dreadful day across the entire market. However, what puzzles me particularly is why has ALD been so negatively hit today to end down nearly 31%? I have never witnessed such a sudden fall in over 30 yrs of investing 'apparently' for reasons beyond the Company's immediate control.

[reddave999] 16/6/2016 13:12

Everything is getting hammered at the moment but this even more, anyone know why?

[igoe104] 05/6/2016 16:31

There's no doubt it's been a torrid few years for Barclays' (LSE: BARC) shareholders. The bank's share price is down almost 17% year-to-date and has halved in the last three years.

First-quarter results in March were disappointing, with a 25% drop in pre-tax profits on the back of huge PPI claims, fines in relation to forex rigging and underperformance from the investment banking division.

To make matters worse, Barclays announced that it would be slashing its dividend to just 3p per share for the next two years, in order to conserve capital and absorb losses from toxic assets. That takes the forecast yield to a low 1.64% for next year's dividend payout.

All in all, it's not a pretty picture at Barclays, and while there's a chance that the new CEO may be able to turn things around down the track, there certainly doesn't seem to be much short-term momentum at the bank.

Challenger banks

If you're looking for a bank that does have some positive momentum, it might be worth checking out challenger banks Aldermore (LSE: ALD) and OneSavings Bank (LSE: OSB).

Not that you'd know from their share prices, which have both also struggled in the last 12 months.

But to my mind, there's a clear disconnect between the performance of these banks and their share prices.

Because whereas Barclays is clearly struggling to increase its earnings, both of these challenger banks are enjoying strong earnings growth.

For example, Aldermore reported adjusted earnings per share of 24p for FY2015, up from 18p in FY2014, a rise of 33%. And with city analysts pencilling-in earnings of 26p and 30p for the next two years, this bank definitely appears to be heading in the right direction.

Similarly, OneSavings Bank reported FY2015 earnings of 35p per share, up from 25p in FY2014, a year-on-year increase of 40%. Analysts have earnings per share estimates of 40p and 43p for the next two years.

Yet despite this stellar growth, both of these challenger banks appear to be trading cheaply.

Aldermore trades on a current P/E ratio of 9.5, which drops to just 8.3 on next year's earnings. And OneSavings Bank's current P/E ratio is 9.7, dropping to 8.4 on next year's earnings.

Given that Barclays trades on a P/E ratio of 13.3 times next year's earnings, the challenger banks certainly appear to offer relative value.

Income investors will be interested to know that while Aldermore doesn't yet pay a dividend, OneSavings Bank paid out 9p per share in dividends last year, a yield of 2.7% at the current share price. Analysts have forecast dividends of 10p and 12p for the next two years, so there's potential for dividend growth here.

Of course, the challenger banks aren't without their own risks.

Both Aldermore and OneSavings Bank specialise in mortgage lending, and with the UK government cracking down on 'buy-to-let' mortgages, there's an element of uncertainty here. Brexit fears are also almost certainly contributing to the recent share price weakness of the challengers.

And given that they're smaller companies, it's likely that their shares will be more volatile.

But in my opinion, the challenger banks offer a great risk-to-reward ratio right now. My advice would be to diversify between a handful of challenger banks, in order to reduce company-specific risk.


On the topic of diversification - if you're looking to build a rock solid long-term portfolio, diversification is critical.