Deliveroo beats expectations, Admiral flags strong growth

“The FTSE 100 built on Tuesday’s gains to trade around a one-month high suggesting investors have moved on from the latest set of jitters over covid variants for now,” say AJ Bell financial analyst Danni Hewson.

“Progress on a huge US stimulus package helped stocks close in positive territory on Wall Street, providing a positive cue for European equities – while the carving up of the UK market by overseas buyers continues apace as Avast agrees to a merger with NortonLifeLock.

“The other key threat stalking the markets is inflation and US inflation figures out this afternoon could be the latest test for the current sunnier sentiment.”

Deliveroo

“After a disastrous start to life as a public company led some wags to denote takeaways platform Deliveroo ‘Flopperoo’, the company appears to be flipping things around and clawing back a little credibility.

“News it had hired a prized Amazon executive in a top technology role and German rival Delivery Hero’s decision to take a sizeable stake in the business have helped lift the share price and kick-start its rehabilitation and there is at least nothing in Deliveroo’s first half results to undermine that process.

“Both the value and volume of orders came in ahead of what was expected in the first half and its coffers look pretty full – boosted by the IPO cash.

“Deliveroo critics will continue to point to issues with the way it treats its delivery riders and the fact it is still a long way from serving up a profit, despite its recent bumper trading.

“The need for scale, fierce competition and significant costs associated with the takeaway sector means further consolidation could be on the cards.

“Hopes that the Delivery Hero stake-building might be a precursor to a full bid look premature however, given Deliveroo founder Will Shu has a controlling position under the company’s dual class structure which would allow him to rebuff any deal for the next three years.”

Admiral

“Admiral comes out of its latest set of results looking like the Rolls Royce of motor insurers. Compared with its peers the growth in profit and customer numbers the company is chalking up is highly impressive.

“While the industry as a whole benefited from a period with fewer cars on the road, leading to fewer accidents and, in turn, fewer claims, Admiral seems to have managed the situation better than its rival insurers.

“Admiral has won over customers by offering flexibility, boosting its digital capability and paying out customer rebates in a timely fashion, helping to put it ahead of the pack in a highly competitive market.

“These qualities have been rewarded with a double-digit increase in customer numbers at a time when other UK motor insurers are struggling to eke out any growth here at all.

“Shareholders are being richly rewarded with record dividend payments and Admiral’s strong financial position gives it lots of options while it works out what route it wants to take next.

“The road ahead could be a little bumpier for Admiral as the artificially lower levels of traffic and collisions driven by covid restrictions starts to unwind, however the company has clearly demonstrated its ability to steer the right course.”

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