LONDON -- I'm always searching for shares that can help ordinary investors like you make money from the stock market.
So right now I am trawling through the FTSE 100 and giving my verdict on every member of the blue-chip index. Simply put, I'm hoping to pinpoint the very best buying opportunities in today's uncertain market.
Today I am looking at Standard Life (LSE:SL) to determine whether you should consider buying the shares at 379p.
I am assessing each company on several ratios:
Price/Earnings (P/E): Does the share look good value when compared against its competitors?
Price Earnings Growth (PEG): Does the share look good value factoring in predicted growth?
Yield: Does the share provide a solid income for investors?
Dividend Cover: Is the dividend sustainable?
Let's look at the numbers:
|Stock||Price||3-Yr. EPS Growth||Projected P/E||PEG||Yield||3-Yr. Dividend Growth||Dividend Cover|
Trading on a projected P/E of 15.3, Standard Life appears more expensive than its peers in the life insurance/assurance sector, which are currently trading on an average P/E of around 13.4.
Unfortunately, Standard Life's P/E ratio and falling near-term growth rate give a negative PEG ratio, which cannot be of any help with my analysis.
However, Standard Life offers a 3.8% yield, about the same as the sector average. In addition, the company has a three-year compounded dividend growth rate of 13%, implying the yield will continue to grow in-line with that of its peers.
Indeed, the dividend is covered twice by earnings, giving Standard Life plenty room for further payout growth.
So, is now the time to buy Standard Life?
Pension and life insurance provider Standard life has grown rapidly during the past year with earnings growing a staggering 125%. That said, as I have written above, many City analysts predict the company's near-term earnings are set to fall.
However, I believe over the longer term, the company's rapid growth will continue.
You see, I understand that demand for both life insurance and pension products is influenced more by the ageing population and government welfare cuts than economic conditions, therefore giving Standard Life a very defensive nature.
Indeed, it appears the company's is already benefiting from legislation introduced in the U.K. back in October, which automatically enrols employees into employer pension schemes. Standard Life enjoyed a 7% rise in assets under management for the first quarter of this year.
Furthermore, it seems as if investors have been impressed with Standard Life's historic growth and defensive nature, so much so that over the past year the stock is up 68%, compared to the FTSE as a whole, which is up only 11%.
Having said that, this rapid rise in the company's share price over the past year does lead me to believe that the company currently looks overvalued, so overall, I feel now does not look to be a good time to buy Standard Life at 379 pence.
More FTSE opportunities
Although I feel now may not be the time to buy Standard Life, I am more positive on the five FTSE shares highlighted within this this exclusive wealth report.
Indeed, all five opportunities offer a mix of robust prospects, illustrious histories and dependable dividends, and have just been declared by the Fool as "5 Shares You Can Retire On"!
Just click here for the report -- it's free.
In the meantime, please stay tuned for my next verdict on a FTSE 100 share.
Rupert does not own any share mentioned in this article. The Motley Fool has a disclosure policy. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. Try any of our Foolish newsletter services free for 30 days.