Q: I appreciate previous concerns with Power, any update based on earnings. In general, the pace of interest rate declines appears to be moderating, is this good for insurance companies?
5i Research Answer:
Insurance companies can at times do better with higher rates, but this was not really the case in 2022. We would not see moderating declines as particularly material to the sector. POW has had a good year, up 24% so far. Our prior concern with POW was relatively slow growth. EPS this year will be less than 2022, and about 8% growth is expected next year. With its 4.8% dividend, this is certainly acceptable, but we think the dip in interest rates has helped the stock valuation more than the fundamentals. It did miss estimates last quarter. Still, a decent company, we would just not expect the same level of gains going forward.