Shares of investment management company Ashmore Group (GB:ASHM) surged by almost 8% after the company announced its full-year results, with a promising outlook, riding high on the recovery in emerging markets.
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The sudden hike provided much-needed support to the company’s falling share prices. Over the past year, the company’s stock has fallen by around 45%.
Challenging times but a promising outlook
The company’s assets under management (AUM) declined by 32% to $64 billion, hit by geopolitical tensions after the Russia-Ukraine war, and other economic pressures from rising interest rates.
As a result, it had a negative investment performance of $16.6 billion and a net outflow of $13.5 billion. Profits were hit the hardest and were down by 58% to £118.4 million.
On the positive side, the company’s operating costs were reduced by 7% year-over-year. Moreover, despite the disappointing numbers, it managed a dividend of 16.9p per share. The company has a dividend yield of 8.2%.
The company is still positive about its long-term growth and believes that, in time, investment activity will rise again. The company’s regional asset management activities in emerging markets have been on track. Also, the diversification of assets in these markets will help the company to offset the overall risks.
The investment bank, Peel Hunt commented on the results, “Ashmore’s latest earnings were broadly in line with their estimates. There remain many reasons for longer-term optimism, albeit there are still clear short-term uncertainties. A strong balance sheet and close to 9% dividend yield offer some short-term compensation.”
What does Ashmore Group do?
Ashmore Group is an investment manager specialising in equities, corporate debt, external debt, and others. The company invests through these assets in emerging markets where capital markets are expanding.
Is Ashmore Group a buy?
According to TipRanks’ analyst rating consensus, Ashmore Group stock has a Hold rating. That’s based on five ratings from the analysts, which include one Buy, two Hold, and two Sell recommendations.
The ASHM target price is 219p, which is 5.3% up from the current price level. The analyst price targets range from a low of 170p per share to a high of 290p per share.
Conclusion
The company results are disturbing but were in line with market expectations – and investors remain hopeful about the company’s long-term outlook.
