Q: I am baffled by the decline here since announcing a dividend increase Feb11. It is down 15% + since. Why? No eps till Mar 2. Surely they would not raise it if the results were going to be less than expected. Your thoughts. Thanks
5i Research Answer:
On Thursday, Klarna, a buy now pay later firm, reported weak results and guidance and the stock fell 27%. This likely contributed to PRL's decline on no news. PRL is a small company, with rate and economic sensitivity. Still, this seems well-reflected in its 8x earnings valuation and 4% yield. On the dividend, while this is not our expectation here, companies do on occasion raise dividends to "soften the blow" of weak results.