Profits Up 30% for Hargreaves Lansdown PLC

LONDON -- Hargreaves Lansdown  (LSE: HL  ) , one of the top performers in the FTSE 100 last year, has ridden rising markets to a strong first half of its fiscal year, with revenue up 24% to a record 140.3 million pounds and profits before tax up 30% to 93.7 million pounds, also a record.

The market likes these numbers sending the shares up a further 6.5% on top of yesterday's nearly 6% gain. Shares have now regained the highs seen in November.

Record was the word of the day as 21,000 new Vantage customers pushed assets under administration to a record 30.4 billion pounds, up 16% from six months earlier. This is quite impressive as the high season for new clients and assets is generally around ISA season (March and April), so investors still have that to look forward to.

Earnings per share were up 33% through the first half of the year to 15 pence -- well on the way to the high end of market expectations for the year. This rapid growth helps justify the forecast P/E of 25, even if that is twice the market average.

CEO Ian Gorham was pleased with the half-year performance, as one might expect, attributing the company's success to focusing on the customer:

Despite continued economic uncertainty in the UK, Hargreaves Lansdown has had the scale, financial strength and market presence to continue to improve its position. Clients appreciate our excellent value, service and informed comment. These results reflect our commitment to clients, the financial security of our business and our ability to provide ever more attractive ways of saving money and investing through a Hargreaves Lansdown account.

Sharing the success with shareholders, the board elected to raise the interim dividend 10%, which supports an expected yield of 3.1% after the recent run-up in share price.

Hargreaves Lansdowns shares have had quite a run in a little over a year -- up over 80% since the start of 2012 -- but today's numbers certainly justify that performance. At current prices there appears to be quite a bit of optimism priced into the shares, but the company continues to deliver. The multiple may look expensive, but if growth continues as it has the shares could be a deal in a few years' time.

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10/21/2016 12:11 PM
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