IA Financial shares plummet after disappointing Q4 earnings
**IA Financial** experienced a sharp decline in its shares on Wednesday following the release of its fourth-quarter earnings, which fell short of expectations.
The Canadian insurance and wealth management provider reported net income of 256 million Canadian dollars ($189.3 million), or C$2.46 a share, up from C$192 million, or $1.71, the previous year. However, core earnings, which represent the company’s ongoing capacity to generate earnings, decreased to C$2.34 a share, missing analysts’ forecast of C$2.48.
The prior-year core earnings had a $22 million gain due to adjustments related to the restatement of the 2022 results. The core return on shareholders’ equity for the last 12 months was 14.4%.
RBC Capital Markets analyst, Darko Mihelic, pointed out the weakness in iA Financial’s Insurance Canada arm and its U.S. operations, where dealer services sales have been underwhelming.
As a result, the company’s shares declined by 9.2% in early trading, settling at C$85.11, and have fallen 3.8% over the past year.
IA Financial expects to achieve average core per-share earnings growth of 10% or more annually and a core return on shareholders’ equity of 15% or more in the medium term, despite the recent negative results.
Analyst comment
This news can be considered negative for IA Financial. The decline in fourth-quarter earnings and missing analysts’ forecast indicate a weak performance. The weakness in its Insurance Canada arm and underwhelming dealer services sales in the U.S. are highlighted as concerns by an analyst. As a result, the market is reacting negatively, with a 9.2% decline in the company’s shares and a 3.8% drop over the past year.
