Value Investor: Two stocks with very different outlooks

Insurance Australia Group is on the way up, while Pacific Brands faces challenges due to the falling Australian dollar.

Recently we updated our valuations for Insurance Australia Group and Pacific Brands, whose shareholders have had very different experiences.

Insurance Australia Group announced a strong fiscal 2014 result, with insurance profit up 11 per cent to $1.58 billion. The result was supported by higher than expected reserve releases in a particularly low-claims environment. The insurance margin widened 110 basis points as a result to 18.3 per cent. The full-year dividend has more than doubled in two years.

The result contrasts with IAG’s unimpressive historical performance.



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