In today’s piece, we will analyze Australian companies Suncorp Group (AU:SUN) and Harvey Norman (AU:HVN) for investors. Both companies had limited upside potential in terms of their share prices but proved to be good additions for income investors.
Let’s have a look at these companies in detail.
Suncorp Group Limited
Suncorp is among the leading financial services companies in Australia, with a portfolio of services like banking and insurance.
Suncorp’s stock has been a good performer in the last year and has rewarded its shareholders with a return of more than 30%.
In February, the company reported its half-yearly results for the fiscal year 2023. The company’s net profit after tax increased by 44.3% to AU$560 million, driven by strong premium and loan growth and higher margins. The insurance segment in Australia contributed the most and posted a jump of 142% in its profits. Suncorp New Zealand’s gross written premiums were up by 12.2% to NZ$1.2 billion due to higher pricing momentum. The expenses were down by 3.1% to AU$1.3 billion, showcasing the company’s efforts to generate higher efficiency in work.
The company also increased its interim dividend by 43.5% to AU$0.33 per share and maintained a payout ratio of 71% of cash earnings.
The company remains on track to achieve its full-year targets for 2023.
Is Suncorp a Good Share to Buy?
SUN stock has a Strong Buy rating on TipRanks with nine Buy and two Hold recommendations.
The average target price is AU$14.14, which is 8.5% higher than the current price.
Harvey Norman Holdings Limited
Harvey Norman is an Australian retailer and a well-known brand among different product categories. The company’s products include furniture, electronic goods, home furnishings, kitchen appliances, etc.
Contrary to Suncorp, Harvey’s stock had a disappointing performance and has been trading down by 20% in the last year. The share fell further after the company reported its half-year results for FY 2023 in the last week.
The company posted a 15% fall in its net profits after tax due to lower sales across divisions and shrinking household spending. It also cut its dividends by 35%, to AU$0.13 per share. The company dividend yield is quite attractive at 10.8%, as compared to the industry average of 2.12%.
However, given the company’s long track record of performance and dividends, management believes this slump represents a good buying opportunity for investors.
Harvey Norman Share Price Forecast
According to TipRanks, HVN stock has a Hold rating based on a total of seven recommendations.
The stock has an average target price of AU$4.21, which is 9% higher than the current price.
Conclusion
Even though analysts are more bullish on Suncorp stock, the price upside is limited to just 8%. Analysts have rated the stock as Strong Buy.
As for Harvey Norman, the company feels the decline in results was an outcome of overall recessionary fears in the economy, and it remains confident over the long-term prospects.
