Opinions
Chris Blumas
Definity Financial
DFY-T
DON'T BUY
Oct 16, 2024
Stock price when the opinion was issued
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Our PAST TOP PICK with DFY has triggered its stop at $56. To remain disciplined, we recommend covering the position at this time. Combined with our previous guidance, this will result in a net investment gain of 37%.
EPS was 65c, missing estimates of 71c; revenue of $1.00B missed estimates of $1.02B. Written premiums rose 9.6%. Combined ratio was 94.5% (more accidents and catastrophe losses). EPS was flat year over year, ROE was 10.3%. Book value rose 16%. The stock is still up 10% on the year, and despite the decline this is not a disaster. But a miss is a miss, and investors may also be selling to move into more exciting areas now that the market is rallying a bit. The outlook still calls for very decent earnings growth over the next two years.
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Depends on what percentage it makes of your portfolio, plus what your cost base is. #1 competitor to DFY is IFC. The industry is consolidating more. DFY might have a leg up on IFC, as DFY is smaller and can buy a few more things in Canada.
Cost inflation and extreme weather give him pause in this area. Both well-run businesses, but inclined to stay away. The sector poses some risks.