Stock of the day: Johns Lyng Group
With a robust business model, Johns Lyng Group leverages the impact of natural disasters to drive revenue, presenting an attractive option for investors.
(AI video summary)
This video was created on 6 March for IG audiences by ausbiz.
ASX code: JLG
Johns Lyng thrives amid natural disaster repair demand
The insurance sector has been under pressure recently due to the anticipated impacts of Cyclone Alfred on southeast Queensland. Among the affected companies is Johns Lyng Group, a building company that specialises in repairing damage caused by natural disasters. Unlike insurers, Johns Lyng benefits from these events as they are contracted to assess and repair damaged properties.
Financial performance
Johns Lyng recently adjusted its revenue forecast for the fiscal year (FY) 2025, expecting it to reach close to $1.2 billion, a 5% decrease from previous guidance. Despite this, the company saw a 7% rise in share prices, indicating investor confidence.
The firm's business-as-usual operations, such as repairing individual homes, performed well, contrasting with the catastrophe division, which saw reduced activity due to fewer natural disasters in the first half (H1) of the year.
Investment opportunities in a volatile market
Despite a recent dip in stock prices, the company's robust business model positions it well for future growth, especially as demand for repairs increases post-cyclone. Analysts project a double-digit annual return over the next five years, driven by a backlog of repair work.
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