Challenger Limited (AU:CGF)
ASX:CGF
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Challenger
(Sydney:CGF)
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Rating:64Neutral
Price Target:
AU$9.00
â–²(13.64% Upside)
Action:ReiteratedDate:03/26/26
The score is supported most by attractive valuation (low P/E with a decent yield) and a positive earnings-call read-through (reaffirmed guidance, ROE above target, dividend increase and buyback). This is tempered by uneven financial performance—especially the sharp revenue decline and high leverage—and softer technical momentum (negative MACD and sub-50 RSI).
Positive Factors
Annuity / Book Growth
Sustained, record annuity sales and book growth build a stable, long‑duration revenue base. Larger annuity volumes increase predictable future cash flows, improve pricing power with distributors, and amortize fixed costs across a bigger liability book, supporting durable earnings over months.
Negative Factors
High Leverage
Material leverage raises financial vulnerability to market or credit shocks and limits strategic flexibility. High debt amplifies earnings volatility, constrains balance‑sheet manoeuvrability for origination or M&A, and can increase funding costs, making capital allocation harder over the medium term.
Read all positive and negative factors
Positive Factors
Negative Factors
Annuity / Book Growth
Sustained, record annuity sales and book growth build a stable, long‑duration revenue base. Larger annuity volumes increase predictable future cash flows, improve pricing power with distributors, and amortize fixed costs across a bigger liability book, supporting durable earnings over months.
Read all positive factors
Challenger (CGF) vs. iShares MSCI Australia ETF (EWA)
Market Cap
AU$5.65B
Dividend Yield3.1%
Average Volume (3M)1.30M
Price to Earnings (P/E)4.8
Beta (1Y)1.23
Revenue Growth11.78%
EPS Growth47.53%
CountryAU
Employees566
SectorFinancial
Sector Strength70
IndustryInsurance - Life
Share Statistics
EPS (TTM)0.31
Shares Outstanding691,661,500
10 Day Avg. Volume1,431,558
30 Day Avg. Volume1,295,356
Financial Highlights & Ratios
PEG Ratio0.61
Price to Book (P/B)1.44
Price to Sales (P/S)7.39
P/FCF Ratio13.89
Enterprise Value/Market CapN/A
Enterprise Value/RevenueN/A
Enterprise Value/Gross ProfitN/A
Enterprise Value/EbitdaN/A
Forecast
1Y Price Target
AU$9.87Price Target Upside24.62% Upside
Rating ConsensusStrong Buy
Number of Analyst Covering5
EPS Forecast (FY)0.65
Revenue Forecast (FY)AU$1.00B
Challenger Business Overview & Revenue Model
Company Description
Challenger Limited is a publicly owned investment manager. The company also provides retirement services to its clients. It manages equity mutual funds. The firm invests into the public equity markets across the world. Challenger Limited was found...
How the Company Makes Money
Challenger makes money primarily through its Life business by selling annuity-style retirement income products and earning a margin between (a) returns generated on the assets backing its annuity liabilities and (b) the amounts it is obligated to ...
Challenger Earnings Call Summary
Earnings Call Date:Feb 17, 2026
(Q2-2026)
| % Change Since: |
Next Earnings Date:Aug 17, 2026
Earnings Call Sentiment Positive
The call emphasized strong operational and strategic progress: record annuity sales and book growth, earnings and ROE above targets, a sizeable after‑tax asset experience, a ratings upgrade, strengthened liquidity and origination activity, plus shareholder returns via a dividend increase and $150m buyback. Headwinds were clearly acknowledged — notably very tight credit spreads compressing reinvestment margins, higher near‑term liquidity holdings, regulatory and licensing timing uncertainty for offshore expansion, and an incomplete Pepper Money discussion — but management framed these as manageable, temporary or strategic trade‑offs while reiterating full‑year guidance and long‑term targets. Overall, positive execution of strategy and capital strength outweigh the cyclical and execution risks discussed.Positive Updates
Earnings Growth and Profitability
Normalized EPS of $0.333 in H1, up 2%; normalized NPAT $229m, up 2%; statutory NPAT $339m reflecting a positive after-tax asset experience of $105m. Group normalized ROE 11.4%, above full‑year target of 10.7% (outperformance 70 bps).
Negative Updates
Margin Compression from Tight Credit Spreads
COE (cash operating earnings) margin moderated to 2.95% due to historically tight credit spreads and a challenging reinvestment environment, weighing on near‑term reinvestment spreads despite disciplined pricing.
Read all updates
Q2-2026 Updates
Positive
Negative
Earnings Growth and Profitability
Normalized EPS of $0.333 in H1, up 2%; normalized NPAT $229m, up 2%; statutory NPAT $339m reflecting a positive after-tax asset experience of $105m. Group normalized ROE 11.4%, above full‑year target of 10.7% (outperformance 70 bps).
Read all positive updates
Company Guidance
Challenger reaffirmed FY26 normalized EPS guidance of $0.66–$0.72 per share (H1 delivered $0.333) and left through‑the‑cycle targets for ROE, cost‑to‑income and capital unchanged; H1 metrics included normalized ROE 11.4% (above the full‑year target of 10.7%, +70bps outperformance), normalized NPAT $229m (+2%), statutory NPAT $339m, Life normalized NPAT $226m (+1%), group net income $487m (+1%) and total expenses $154m (flat) with cost‑to‑income improving ~30bps and sitting below the 32–34% target range; management announced a fully franked interim dividend up 7% to $0.155 per share and a proposed $150m on‑market buyback, reported Life PCA of 1.58x with $1.7bn of capital above APRA minimum (pro‑forma ~1.74x day‑1 of new standards, ~1.82x at long‑term spreads), and highlighted growth metrics—record annuity sales $3.8bn (+32%; domestic $3.1bn,+37%; offshore $0.7bn,+13%), total life sales $5.1bn (+11%), book growth 5.8%, annuity book growth 7.4%, cash & equivalents $3.3bn (up 27%), $105m after‑tax asset experience and $5.9bn of originations (incl. $2.5bn private credit)—while flagging further capital‑framework work ahead of APRA reforms effective 1 July 2026.Challenger Financial Statement Overview
Summary
Income Statement
45
Neutral
Balance Sheet
55
Neutral
Cash Flow
60
Neutral
| Breakdown | TTM | Jun 2025 | Jun 2024 | Jun 2023 | Jun 2022 | Jun 2021 |
|---|---|---|---|---|---|---|
Income Statement | ||||||
| Total Revenue | 2.74B | 750.50M | 3.28B | 2.23B | -414.30M | 3.03B |
| Gross Profit | 295.10M | 750.50M | 635.90M | 652.20M | 1.36B | 1.79B |
| EBITDA | 1.23B | 1.11B | 924.70M | 970.50M | 414.30M | 1.17B |
| Net Income | 458.80M | 192.30M | 129.90M | 287.50M | 253.70M | 592.30M |
Balance Sheet | ||||||
| Total Assets | 35.37B | 34.95B | 33.41B | 30.98B | 29.74B | 29.99B |
| Cash, Cash Equivalents and Short-Term Investments | 755.20M | 32.39B | 573.20M | 593.40M | 733.10M | 989.40M |
| Total Debt | 8.07B | 8.27B | 7.13B | 5.89B | 5.85B | 6.39B |
| Total Liabilities | 31.26B | 31.09B | 29.52B | 26.81B | 25.75B | 26.17B |
| Stockholders Equity | 4.11B | 3.86B | 3.88B | 4.16B | 3.99B | 3.83B |
Cash Flow | ||||||
| Free Cash Flow | 1.88B | 399.40M | 841.80M | 1.27B | 2.48B | 2.56B |
| Operating Cash Flow | 1.88B | 399.60M | 843.70M | 1.27B | 2.49B | 2.58B |
| Investing Cash Flow | -1.95B | -1.18B | -1.94B | -1.34B | -2.12B | -865.00M |
| Financing Cash Flow | 265.40M | 854.70M | 1.08B | -35.00M | -619.80M | -1.38B |
Challenger Technical Analysis
Negative
7.92
Price Trends
8.55
Negative
8.75
Negative
8.46
Negative
Market Momentum
-0.20
Negative
43.87
Neutral
67.96
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For AU:CGF, the sentiment is Negative. The current price of 7.92 is below the 20-day moving average (MA) of 8.05, below the 50-day MA of 8.55, and below the 200-day MA of 8.46, indicating a bearish trend. The MACD of -0.20 indicates Negative momentum. The RSI at 43.87 is Neutral, neither overbought nor oversold. The STOCH value of 67.96 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for AU:CGF.
Challenger Peers Comparison
UnderperformOutperform
Sector (68)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
68 Neutral | $18.00B | 11.42 | 9.92% | 3.81% | 9.73% | 1.22% | |
64 Neutral | AU$5.65B | 4.78 | 11.51% | 3.10% | 11.78% | 47.53% | |
64 Neutral | AU$5.60B | -724.26 | 32.56% | 1.45% | 28.29% | 39.39% | |
62 Neutral | AU$117.11M | 5.15 | 5.62% | ― | 21.79% | -23.00% | |
61 Neutral | AU$3.18B | 14.10 | 13.61% | 3.45% | 37.42% | 38.37% | |
56 Neutral | AU$1.68B | 8.08 | 6.18% | ― | 16.78% | 22.86% | |
50 Neutral | AU$1.86B | 9.75 | -1.00% | 6.01% | 2.87% | 87.93% |
* Financial Sector Average
AU:CGF
Challenger
8.21
2.43
42.12%
AU:PPT
Perpetual Limited
16.16
-2.65
-14.09%
AU:PNI
Pinnacle Investment Management Group Limited
14.68
-3.72
-20.20%
AU:JDO
Judo Capital Holdings Limited
1.50
-0.32
-17.86%
AU:NOL
NobleOak Life Ltd
1.26
-0.17
-11.58%
AU:NWL
Netwealth Group Ltd.
22.84
-4.30
-15.83%
Challenger Corporate Events
Challenger Drops Pepper Money Bid as $150m Share Buy‑Back Cleared
Mar 24, 2026
Challenger Limited, the Australian retirement‑focused investment manager and annuities provider, has confirmed that its proposed joint acquisition of Pepper Money Limited will not proceed after Pepper Money’s Independent Board Committe...
Pepper Money Drops Challenger Bid as Strong Growth Supports Standalone Strategy
Mar 24, 2026
Pepper Money has ended discussions with Challenger Limited after its Independent Board Committee concluded that Challenger’s revised non-binding offer of A$2.25 per share was not reasonably capable of execution. The decision halts a potentia...
Challenger Flags Historic Oversight in Director Interest Disclosure
Mar 23, 2026
Challenger Limited has disclosed an historic oversight in reporting a director’s interest in an unlisted managed investment scheme issued by its subsidiary, Fidante Partners. The interest, held indirectly by director Melanie Willis via the W...
Challenger Cuts Bid but Declares Final Offer for Pepper Money
Mar 16, 2026
Challenger Limited has submitted a revised, confidential, non-binding and conditional proposal, alongside Pepper Group ANZ HoldCo, to acquire Pepper Money Limited. The new offer reduces the price from $2.60 to $2.25 per share, adjusted for Pepper ...
Challenger Cuts Takeover Offer for Pepper Money Amid Market Deterioration
Mar 16, 2026
Challenger Limited has revised its non-binding indicative offer to acquire 100% of Pepper Money Limited, cutting the proposed scheme of arrangement price from A$2.60 to A$2.25 per share. The new price is expressed as Challenger’s best and fi...
Challenger targets investors with new discussion pack at Jefferies Asia Forum
Mar 16, 2026
Challenger Limited has released an investor discussion pack in conjunction with a presentation at the Jefferies Asia Forum in March 2026, underscoring its ongoing engagement with global capital markets. The materials, authorised by the group’...
Challenger Suspends DRP in Update to December Half-Year Dividend
Mar 12, 2026
Challenger Limited has updated its earlier dividend notification relating to the six-month period ended 31 December 2025, confirming key dates including an ex-dividend date of 24 February 2026, a record date of 25 February 2026 and a payment date ...
Challenger Suspends Dividend Reinvestment Plan for Interim 2026 Payout
Mar 12, 2026
Challenger Limited has suspended its Dividend Reinvestment Plan for the interim 2026 dividend, with the decision taking effect immediately under its DRP rules. While the plan remains suspended, all existing DRP participants will receive their inte...
Challenger exits substantial holder position in IPD Group
Mar 6, 2026
Challenger Limited has notified IPD Group Limited and the ASX that it has ceased to be a substantial holder in IPD Group, ending its previous large-shareholder status. The change, formalised through a statutory notice under the Corporations Act, m...
Challenger sets discretionary quarterly distribution on Capital Notes 4
Feb 27, 2026
Challenger Limited has declared a discretionary quarterly distribution of AUD 1.30 per Challenger Capital Notes 4 security (ASX: CGFPD), linked to 3‑month BBSW plus a 3.60% margin. The distribution relates to the quarter ending 24 May 2026, ...
Challenger Exits Substantial Holder Position in HUB24
Feb 10, 2026
Challenger Limited has notified the market that it has ceased to be a substantial holder in HUB24 Limited, formally lodging a notice with the ASX to confirm the change in its relevant interest. The move indicates that Challenger and its associated...
Challenger Confirms Advanced Talks on Strategic Stake in Pepper Money
Feb 8, 2026
Challenger Limited has confirmed it is in advanced but incomplete talks to partner with Pepper Group ANZ HoldCo to jointly acquire Pepper Money Limited via a scheme of arrangement. Under the proposal, Pepper Group would initially hold at least the...
Challenger Exits Substantial Holder Position in Smartgroup
Feb 6, 2026
Challenger Limited has notified the ASX that it and its associated entities have ceased to be a substantial shareholder in Smartgroup Corporation Limited, lodging the required Form 605 notice of ceasing to be a substantial holder. The change reduc...
Challenger Exits Substantial Shareholder Position in Telix Pharmaceuticals
Jan 23, 2026
Challenger Limited has notified the ASX that it has ceased to be a substantial holder in Telix Pharmaceuticals Ltd, formally lodging the required notice under the Corporations Act. The change indicates Challenger and its associated entities have r...
Challenger Issues New Tranche of Unquoted Performance Rights Under Incentive Plan
Jan 19, 2026
Challenger Limited has issued 179,017 unquoted performance rights under its employee incentive scheme, effective 16 January 2026. The grant of these performance rights, which will not be quoted on the ASX, underscores the company’s continued...
Challenger Announces Lapse of 73,857 Performance Rights
Jan 12, 2026
Challenger Limited has notified the market that 73,857 performance rights (ASX code: CGFAA) have lapsed as of 31 December 2025 after the conditions attached to those rights were not met or became incapable of being satisfied. The cessation of thes...
Challenger Updates Market on Minimal Change to Employee Plan Share Holdings
Dec 31, 2025
Challenger Limited has disclosed that it, together with its controlled entities, holds or has derivative exposure to 50,197 ordinary shares in Challenger, representing 0.0073% of the company’s total issued capital, primarily via the Challeng...
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.