Navigator Global Investment guides to higher earnings

Shares in Navigator Global Investments (ASX: NGI) were up around 12% at the open after the smallcap diversified asset management holding company guided the market to higher-than-expected earnings, courtesy of a strong performance from its NGI Strategic Portfolio.

To the uninitiated, Navigator provides alternative asset management and services to global institutional investors through the US based Lighthouse Investment Partners business.

Navigator now expects adjusted earnings (EBITDA) to be between $US43m to 45m versus previous guidance of $US40-42m, while adjusted net profit after tax is forecast to be between $US33m and $US35m.

Strong start to 2022

Last month the fund manager noted that the managers of the NGI Strategic portfolio had generated strong investment performance in the first two months of 2022.

With a market cap of only $322m, Navigator is not widely covered by Australia brokers.

However, the two brokers that do cover Navigator have a Strong Buy on the stock.

Based on the fund manager’s first half forecast-beating performance, and an expectation that FY22 guidance was understated, Ord Minnett reiterated a Buy rating mid-February.

The broker’s target price of $2.40 represents 50.9% upside to the current price and is forecasting a full year FY22 dividend of 15.55 cents and earnings per share of 18.80 cents.

While return on equity (ROE) has slipped from double-digits since 2019, it has remained at around 9% over the last two years.

Based on Morningstar’s fair value of $2.09, the stock appears to be undervalued.

In light of today’s share price movement it’s worth noting that the fund manager’s top 20 Shareholders control 83.89% of shares on issue.

Navigator Global Investments' share price movement over three months.