Just Eat Takeaway benefits from lockdown demand, and Admiral catches up on dividends

“The FTSE 100 continues to make gains as risk appetite returns, approaching the 6,200 mark last seen in mid-to-late July,” says AJ Bell Investment Director Russ Mould.

“Continuing hopes for a vaccine and the prospect of a big stimulus package in the US are enabling investors to look past the global coronavirus crisis to the sunny uplands of recovery.

“The worst quarterly fall in output since records began in the UK and the resulting slide into a deep recession was met with a shrug – the pound pretty stable against other major currencies – as it had been widely anticipated.

“Gold prices began to tail away amid the improving sentiment, falling from their $2,000 per ounce high water mark.”

Just Eat Takeaway

“Deprived of the opportunity to eat out in lockdown it seems many of us ordered in food to help break up the tedium and give our kitchens a rest.

“This clearly benefited platforms like Just Eat which saw big increases in orders, revenue and profit. The merger which created the group and the proposed takeover of Grubhub did incur costs but the benefit is geographically diversified exposure to the takeaway trend.

“A key question to weigh is whether the impact of Covid-19 on the space will be short-lived or if it will be a lasting legacy of the pandemic.

“People may take time to get used to frequenting restaurants again, particularly while restrictions are in place, but there are other attractions to getting someone else to prepare your food than just the eating of it and people may eventually be drawn back to the social side of going out for a bite.

“The company’s acquisition drive reflects the pressure it feels in an extremely competitive marketplace – one that includes Deliveroo and Uber Eats.

“Deliveroo casts a particularly large shadow thanks to Amazon’s plan to take a stake in the business – though this remains subject to approval by the competition authorities.

“Typically Amazon parking its tanks on the lawn in a market is bad news for the competition.”

Admiral

“Shareholders unsurprisingly were very pleased to see Admiral join the catch up dividend club.

“Paying out to shareholders the special payment deferred at the height of the crisis, as well as revealing a generous increase in the first half payout was both perceived as good news in and of itself as well as signal of management’s confidence in the business.

“This confidence was underpinned by results showing profit well ahead of expectations as the company demonstrated an impressive ability to adapt to the new realities created by coronavirus.

“One helpful side-effect of lockdown was a reduction in motor insurance claims as people chalked up far fewer miles on the road, reducing the incidence of accidents.

“This explains the big improvement in the group’s combined ratio, the ratio of claims to premiums, which came in almost 10% lower year-on-year.

“The company’s Stay at Home premium refund for customers may have helped engender some loyalty for a relatively modest outlay, particularly as the move wasn’t replicated among its wider peer group.”

These articles are for information purposes only and are not a personal recommendation or advice.