Glenworth Mortgage Insurance: Buy or Avoid?

Recently, GMA’s price has been smashed from a high of AUD$3.50 to the current AUD$2.90 today; various factors like increased likelihood of mortgage distress, etc contributing to the lower than anticipated bottom line.

Compared to other popular peers like CVO (covermore), it’s P/E ratio looks tantalizing, it’s dividend yield is fantastic (8.6% if it holds at around AUD$2.80 to AUD$3 bucks) and the EPS is still relatively strong at 30.1 cents.

What are your thoughts?
Oversold on fears?
Market moving to other peers?

Or, perhaps, if one holds a contrarian view, time to dip in and buy some?

Your thoughts,

Kind regards

A: Glenworth Mortgage Insurance (GMA) is a high risk stock. It is very unlike CoverMore (CVO) or other insurers.

If you understand lenders mortgage insurance, then you will know what I mean.

The other key difference is that 78% of its business comes from 3 customers – it very exposure to major customer risk.

Consequently, it is not a stock I touch.

Clearly, I am a bit biased – so let’s see what the brokers say. According to FM Arena, sentiment is marginally positive (+0.5 on a scale of -1.0 being most negative, +1.0 most positive), consensus target price is $3.18.

Hope this helps


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