Financial Analysis of Admiral Group PLC: Eikon Coursework Project

This project analyzes the Admiral Group PLC, a multinational car insurance provider, using Eikon software. The analysis includes examining share price movements, dividend information, and earnings surprises. It utilizes News Monitor and Social Media Monitor to gauge public sentiment and relevant news. The study delves into the firm's fundamental information, such as revenue, EPS, and liquidity ratios, comparing them with share price movements. The relationship between social media sentiment, fundamental data, and stock prices is critically discussed, along with the potential application of an ERP system for BCU university. The project references relevant academic sources to support its findings and conclusions. The project aims to provide a comprehensive financial analysis of the Admiral Group PLC, integrating various data sources to assess its performance and market perception, while also exploring the potential benefits of ERP systems in an educational context.

Firm
Set up in 1993, the Admiral Group PLC is a multinational car insurance provider with operations
in up to 8 countries. The firm’s main headquarters are in the Cardiff and Wales both in the
United Kingdom. Currently, it is headed by Annette Court as the board chairperson and David
Stevens as the CEO (Admiral Group PLC, 2019). At the close of the financial year 2017/2018,
the firm made an estimated £1,261.6 million with an operating income of £487.5 million and net
income of £390.5 million. In this study, we will analyze data related to the Admiral Group PLC
according to the requirements given and propose probable use of an ERP system to BCU
university.
Question 1
Show the firm’s share prices movement with dividend information and earnings surprise
information (if there is any) in Financial Chart of Eikon.

Question 2
Use News Monitor to find out relevant news over the most recent 1 year.

Question 3
Use Social Media Monitor to check the firm’s monthly social media sentiment over the
most recent 1 year (or as early as you could find out if shorter than 1 year), alongside with
the firm’s peers’ social media sentiment.

Question 4
Use proper methods to find out the firm’s fundamental information such as revenue, EPS
and liquidity ratios, and also create figures for these items over last 3 years. Compare this
fundamental information with the firm’s share prices movement and discuss the
relationship between fundamental items and the firm’s share prices.

Discussion
From the graph on price movement in question 1, we note a drop on the stock price for the
Admiral Group PLC towards the end of November 2018. However, at the start of December the
downtrend reversed and there was an increase in the stock price of the firm. Further, examining
the graphs of the total revenue and the equity per share, we note an upward trend from the years
2016, 2017 and 2018 with 2018 having the highest fundamental information scores.
An article written in 2019 and published in “Zacks” a renowned research company admits the
complexity of the relationship between a firm’s earnings and its stock price. In that, high loses or
high profits do not always imply equally high stock prices and neither do losses necessitate a
drop in stock prices (Grant, 2019). Ideally, some of the most influential factors on stock price are
current earnings and the promise of future earnings. In the year 2019, we note a rise in the stock
prices to mark a beginning of the rise of stock prices in the firm which slacks a bit in mid-June
but shows an upward trend generally for most of the year into 2019.
Now let’s consider the graph below which shows the distribution of stock prices since the year
2014 to 2019:

In this graph we have the distribution of the stock price from the years 2014 to 2019. Taking into
consideration the graphs on factors such as eps and total revenue one can notice a common trend
i.e. a steady increment across the years 2016, 2017 and 2018 for both the stock price and
fundamental information.
What then, is the effect of returns on the stock? To answer this, let’s consider a scenario where
an investor buys shares in the firm but the firm is not performing i.e. low eps consistently. Is
such a case many investors choose to sell their stocks hence creating more supply than the
demand since not many investors choose to invest in a losing stock if they are momentum traders
for instance hence the stock price drops.

Question 5
Use proper method to compare the firm’s share prices movement with the firm’s social
media sentiment. Jointly with all information above, critically discuss the relationship
between relevant factors such social media sentiment and fundamental information, and
firms’ share prices.
Discussion
In classical machine learning, sentiment analysis also referred to as opinion mining is classified
under natural language processing and is mainly concerned with the analysis of text to try and
obtain the opinions conjured by the texts. A simple search in google for the word “Sentiment

Analysis” returns approximately 92,200,000 results, a proof of the extent to which the idea of
sentiments is being studied. One journal article notes that, “Public’s sentiment in social media
changes firms’ stock prices by affecting investors’ perceptions and their investment decision-
making” (Chen & Chen, 2017). Several studies that seek to examine the factors which affect to
the volatility of the stock converge to the generalization that, in stock market there is a common
supposition that stock prices are highly reactive to new information (Quaye, Mu, Abudu, &
Agyare, 2016).
The above graph shows line graphs that outline the trend of both social media sentiments and the
stock prices for the periods between May 2018 and May 2019. At face analysis of the trends of
both the sentiment and stock price curves one notes that a dip in the sentiment corresponds with
a dip in the stock price while a rise in the sentiment most of the time corresponds with a rise in
the stock price.
Among the factors that affect the ability of a firm to raise revenue is the stock price. After all is it
not the point of listing a firm in the stock market so as to raise revenue for the firm? The main
effect underlying dropping of the stock price is that the firm will almost always reduce the
amount of shares hence fail to make shares (Pettinger, 2017). Subsequently, the lower the
revenue generated by the firm the lower the ability of the firm to deal with its short term
liabilities, the lower the firm’s ability to meet the long term liability that become current
eventually.
However, when there is a general fall of stock prices in the market for instance a fall in FTSE-
100, individual firms do not worry much. The trouble descends when the factors that affect stock
are on a firm level such as the scenario by sentiment effects. In this regard one can posit that
social sentiments, stock prices and business performance are correlated therefore one may further

argue that the increase in factors such as earnings per share by the firm from 2016 to 2018 might
have be partly contributed by positive public sentiments which had influenced higher stock
prices hence revenue in the firm.
Application of ERP
Considering the role of ERP in monitoring the performance of the Admiral Group PLC as
demonstrated when addressing the 5 questions above, one can draw just as many ways through
which the ERP system can benefit BCU university if integrated. For instance, with majority of
the university students being active on social media, the school can obtain the social sentiments
of the students and be able to predict any possibility of dissatisfaction with a given aspect of the
school’s activities/ method operation processes etcetera and in so doing deal with such issues if
the sentiments are negative.
In addition, the can use an ERP system to analyze the trends in student admissions can help to
determine the popularity of the school as well as its performance. In conclusion, ERP is an
important part of organizational management due to its ability to provide means through which
the executive can monitor the organization’s performance using information that is up to date
given that an ERP system is designed in such a way that it draws latest information regarding the
aspects its designed to cover.

References
Admiral Group PLC. (2019, June 10). Our Story. Retrieved from Admiral Group PLC:
https://admiralgroup.co.uk/our-story
Chen, H., & Chen, Y. (2017). Does the Impact of Sentiment on Firm Financial Performance
Transmit in Supply Chain? DECISION SCIENCES INSTITUTE (pp. 56-72). Norfolk:
Smith & Johnson .
Grant, C. (2019, February 05). Relationship Between Earnings & Stock Market Value. (R.
Cockerham, C. C. Markets, & C. Finance, Editors) Retrieved from Zacks:
https://finance.zacks.com/relationship-between-earnings-stock-market-value-4890.html
Pettinger, T. (2017, August 18). How do share prices affect firms? Retrieved from Economics:
https://www.economicshelp.org/blog/3137/economics/how-do-share-prices-affect-firms/
Quaye, I., Mu, Y., Abudu, B., & Agyare, R. (2016). Review of Stock Markets’ Reaction to New
Events: Evidence from Brexit. Business & Economics, 5(4), 281-314.
doi:10.4236/jfrm.2016.54025