S&U (LON:SUS) Posts Earnings Results

Key Points

• Profit and dividends increased: Adjusted group profit before tax rose 7% year over year, while the interim dividend increased to 36p per share from 35p.
• Funding and lending expanded: Net receivables surpassed £541 million, and new warehouse facilities could nearly double funding capacity to £650 million and potentially lower financing costs.
• Credit trends improved, but leverage rose: Advantage repayments improved and arrears declined, although net borrowings reached £285.1 million and gearing increased to 114%, adding financial risk amid mixed property-market conditions.

S&U (LON:SUS - Get Free Report) announced its quarterly earnings results on Tuesday. The company reported GBX 96.80 earnings per share (EPS) for the quarter, Digital Look Earnings reports. S&U had a net margin of 22.07% and a return on equity of 9.68%.

Here are the key takeaways from S&U's conference call:

• Underlying profit growth: Group profit before tax rose 7% year over year on an adjusted basis, excluding last year’s exceptional Aspen recovery. The interim dividend increased to 36p per share from 35p, with management anticipating further dividend growth.
• Strong lending and funding expansion: Net receivables exceeded £541 million, while new three-year private warehouse facilities are expected to increase funding capacity from roughly £337 million to £650 million and potentially reduce financing costs. Completion and drawdown are anticipated in October, subject to finalization.
• Advantage reported improving credit performance: Repayments rose to 92% of amounts due from 90%, impairment remained broadly stable despite receivables growth, and the proportion of accounts six or more months in arrears declined. Management is targeting a doubling of Advantage’s market share over five years, supported by new origination channels, technology and AI investments.
• Higher leverage and mixed market conditions remain risks: Net borrowings increased to £285.1 million and group gearing rose from 97% to 114% as the company funded growth. Aspen faces a subdued UK property market and slower repayments, while its longer-term products create a later profit profile; management also acknowledged that greater securitization-driven gearing will increase financial risk.

S&U Stock Down 2.8%

SUS opened at GBX 1,910 on Tuesday. The firm's 50 day simple moving average is GBX 1,972.98 and its two-hundred day simple moving average is GBX 1,960.56. The company has a market capitalization of £232.08 million, a PE ratio of 9.78 and a beta of 0.56. S&U has a 1-year low of GBX 1,620 and a 1-year high of GBX 2,458.50. The company has a current ratio of 1,290.95, a quick ratio of 58.00 and a debt-to-equity ratio of 97.18.

Wall Street Analyst Weigh In

Separately, Berenberg Bank restated a "buy" rating and set a GBX 2,310 price objective on shares of S&U in a research report on Tuesday. Two research analysts have rated the stock with a Buy rating, According to MarketBeat.com, the stock presently has a consensus rating of "Buy" and a consensus target price of GBX 2,155.

Insiders Place Their Bets

In related news, insider Anthony M. V. Coombs sold 3,300 shares of S&U stock in a transaction on Thursday, July 9th. The stock was sold at an average price of GBX 1,940, for a total transaction of £64,020. Also, insider Graham Coombs sold 2,500 shares of the firm's stock in a transaction dated Wednesday, July 1st. The stock was sold at an average price of GBX 1,945, for a total value of £48,625. 62.01% of the stock is currently owned by company insiders.

S&U Company Profile

S&U plc provides motor, property bridging, and specialist finance in the United Kingdom. The company was incorporated in 1938 and is headquartered in Solihull, the United Kingdom.