In February, Sydney-based insurer QBE’s FY23 result demonstrated an improved return on equity (ROE) of over 20% in the second half, leaving the business well-positioned for a solid earnings position over the years ahead. Importantly, in the current environment, their conservative guidance leaves them with the potential to under promise and over deliver, something that has not typically happened by the QBE of the past.
The stock remains cheap, trading on an estimated PE of 9.6x compared to its global peer average of ~12x before we consider the company’s ongoing simplification strategy which is having a positive impact on the returns being generated.
- QBE remains our preferred pick in the sector, but it’s hard to get excited about it above $17 in the short term.
MM likes QBE into pullbacks
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