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Hargreaves Lansdowne (LSE: HL) stocks rally last week. On Wednesday morning, the share price rose after the online broker released its latest semi-annual results. But then the stock fell just as sharply, swinging more than 15% in one day.
Four years of stagnation
Long before the Covid-19 financial markets crashed, Hargreaves Lansdown shares closed at 2419p on May 17, 2019. At the time, I remember thinking they were overvalued and sure about to slide.
Sure enough, the arrow hit the ground hard. Here are the closing prices for the past three years:
|end of 2020
|End of 2021
|end of 2022
For the record, Hargreaves Lansdown’s share price has never come close to its spring 2019 peak. In fact, at its 2022 low, it crashed to just 735.6p on Oct. 24. On Friday, this FTSE 100 index The stock closed at 853.6p, up 16% from last year’s low. This values the group’s equity at £4.1 billion.
Even during the 2020-21 stock market boom, Hargreaves Lansdown shares had a volatile time. And with the collapse of financial markets last year, this stock has seen a rough 2022.
In fact, it has not been so good to its owners over the past year, losing 33.7% of its value. Over the course of five years, Hargreaves Lansdown shares have collapsed by nearly half. Ouch.
Then again, when I buy a stock today, I’m buying a stake in the company’s future performance, rather than its past. And with the company’s stock price plummeting, I’ve added this declining stock to my watchlist of potential buys.
It is clear that the investment services offered by Hargreaves and other major fund stores will play a key role in the financial future of millions of Britons. The company’s annual revenue also jumped by a fifth to £350m in 2022, while profit before tax rose 31% to £198m.
In short, the company – founded in 1981 – appears to be in good health. But what about the basics of her share?
This stock was overrated. what about now?
The shares are trading on a P/E ratio of 16.1, for a dividend yield of 6.2%. This is slightly more expensive than the broader FTSE 100. And its dividend yield of 4.7% annually is a full percentage point higher than Footsie’s cash yield. But this is covered by only 1.3 times earnings, which is not a wide margin of safety.
Moreover, the company is embroiled in a very public dispute with co-founder and largest shareholder, billionaire Peter Hargreaves. He argues that the group should aggressively cut costs and lay off workers. This cannot be very motivating to the company’s workforce.
In summary, my opinion is that Hargreaves Lansdown shares look cheap today in historical terms. Plus, I like the look of their earnings that beat the market. But I wouldn’t buy this stock just yet, because I see better deals lurking in the FTSE 100 right now.