Right now Mapfre presents the best performance of the three listed insurers in the market, compared to Catalana Occidente and Línea Directa. The largest of them has also put aside the competition to win customers, as published by Expansión, with the idea of making their policies more expensive in line with inflation and thus avoiding a worsening of their combined ratio between claims and operating expenses.
One option is, with respect to income from insurance premiums, which, for example, weighs down Linea Directa’s business in the motor segment, given the increase in movements, and, therefore, the higher claims rate that is being producing.
We are also talking about a segment that is becoming complicated, especially due to the price war that led to the application of heavy discounts in previous years to attract customers. Now, Mapfre changes that tonic. Now the fundamental thing is to take care of and keep the clients that they have and not necessarily attract new ones through the reduction of prices in the market.
In addition, insurers will benefit from the increase in interest rates in their investments, something that the market is already reading clearly. Although from Alphavalue they have just cut their progression in earnings per share for the current year 21% in 2022 and 12.2% in 2023. Despite this, they choose to recommend adding with a target price that reaches 1.90 euros per share , with a potential upward trend of …%.
In its price graph we see that the value is already positive in its baggage of the last 4 weeks, with increases of 1.5% and an accumulated positive these days that exceeds 7.6% to which is also added that has ended its annual losses, with just a rise in 2022 of 0.22%.
Mapfre, “bounces from the support level 1,502 euros, forming a double bottom pattern. It manages to violate the resistance zone 1.612 / 1.629 euros and the medium-term bearish trend line dotted in fuchsia. To have a sign of strength, it would be necessary to break the upper side of the flag in black. The following resistances are located at the simple moving average of 200 periods and the medium-term downtrend line in green”, as indicated by the independent analyst, Néstor Borrás
Mapfre on daily chart with Average Amplitude Range in percentage, MACD oscillator and trading volume
In addition, the technical indicators prepared by Investment Strategies place Mapfre in a total score of 3 points, improved by two, out of the 10 to which the value can aspire. Among the best, the medium-term trend that is bullish and the volatility or amplitude range of the insurer that, in the medium and long term, is decreasing for the value.
On the negative side, the long-term downward trend of Mapfre undoubtedly stands out, the total negative moment, both slow and fast, the volume of business in both aspects, in the medium and long term, is decreasing.
Already, from the fundamental point, the investment strategies analyst María Mira affirms that Mapfre, “in a valuation by ratios and under EPS forecast for the end of 2022 of €0.22/share, there is a margin between value and price”
Ei’s fundamental expert highlights that “the market discounts a PER < 7.58v, with room for improvement compared to an average PER for the Ibex 35. Undervaluation also by book value (PVC of Mapfre at 0.56x based on 2022e forecasts, compared to an average for the Ibex 35 >2). The dividend yield is one of the highest on the Ibex 35 and, as we have indicated, at the prices of this report the Yield is around 8.9%. Based on our fundamental assessment, we see a significant gap between value and price, so we remain positive on long-term value.”