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Migdal Insurance and Financial Holdings Ltd. (MGDL) Report Analysis

Corporate Events

Positive

Doral Renewables LLC announced that it expects ...

2022-10-18 00:00:00

Doral Renewables LLC announced that it has entered into an agreement to issue convertible notes for an aggregate gross proceeds of $500 millio...

Positive

Virility Medical announced that it expects to r...

2022-07-21 00:00:00

Virility Medical has received $10 million of funding on July 21, 2022. This transaction serves as the first tranche of a $40 million round, sa...

Positive

AgriTask Ltd. announced that it has received $3...

2022-06-14 00:00:00

On June 14, 2022, AgriTask Ltd. closed the transaction. The company received $31 million in the transaction. The transaction included particip...

Positive

Fu-Gen AG announced that it has received fundin...

2022-04-25 00:00:00

Fu-Gen AG announced that it has received more than €320 million in a round of funding on April 25, 2022. The transaction will include particip...

Positive

Rewire inc. announced that it has received $25 ...

2022-02-08 00:00:00

Rewire inc. announced that it has received $25,000,000 in a round of funding led by new investor Migdal Insurance and Financial Holdings Ltd. ...

Positive

AgriTask Ltd. announced that it has received $2...

2022-02-03 00:00:00

AgriTask Ltd. announced that it has raised $26 million in a round of funding led by new investor Liechtensteinische Landesbank Aktiengesellsch...

Positive

tipa-corp ltd announced that it has received $7...

2022-01-02 00:00:00

tipa-corp ltd announced that it has raised $70 million in an equity round of funding co-led by returning investor Millennium Food Tech Limited...

Positive

Doral Renewables LLC announced that it expects to receive $500 million in funding from Apollo Global Management, Inc., Migdal Insurance and Financial Holdings Ltd.

2022-10-18 00:00:00

Doral Renewables LLC announced that it has entered into an agreement to issue convertible notes for an aggregate gross proceeds of $500 million on October 18, 2022. The transaction includes participation from new investor, funds managed by Apollo Global Management, Inc. and returning investor, Migdal Insurance and Financial Holdings Ltd. The notes are convertible into common shares of the company at a pre money valuation of $1.5 billion. Corinne Still of Apollo Global Management, Inc. will join the company's board of directors as a part of the transaction.

Positive

Virility Medical announced that it expects to receive $10 million in funding from Arkin Investments Ltd., Migdal Insurance and Financial Holdings Ltd.

2022-07-21 00:00:00

Virility Medical has received $10 million of funding on July 21, 2022. This transaction serves as the first tranche of a $40 million round, saw participation from Migdal Insurance and Financial Holdings Ltd. for $8 million and returning investor, Arkin Investments Ltd for $2 milion.

Positive

AgriTask Ltd. announced that it has received $31 million in funding from Liechtensteinische Landesbank Aktiengesellschaft, Bridges Israel Ltd., Smart Agro - Limited, Global Innovation Fund, Migdal Insurance and Financial Holdings Ltd.

2022-06-14 00:00:00

On June 14, 2022, AgriTask Ltd. closed the transaction. The company received $31 million in the transaction. The transaction included participation from Global Innovation Fund and Migdal Insurance and Financial Holdings Ltd. On the same date, the company received $5 million as second and final tranche.

Positive

Fu-Gen AG announced that it has received funding from Migdal Insurance and Financial Holdings Ltd., Menora Mivtachim Insurance Ltd., Arkin Holdings

2022-04-25 00:00:00

Fu-Gen AG announced that it has received more than €320 million in a round of funding on April 25, 2022. The transaction will include participation from new investors, Migdal Insurance and Financial Holdings Ltd., Menora Mivtachim Insurance Ltd. and existing investor, Arkin Holdings. The investable capital is comprised of commitments to the newly established Fu-Gen Assets 4 Platform, direct equity investment in Fu-Gen AG as well as co-investment rights in projects held by Fu-Gen.

Positive

Rewire inc. announced that it has received $25 million in funding from a group of investors

2022-02-08 00:00:00

Rewire inc. announced that it has received $25,000,000 in a round of funding led by new investor Migdal Insurance and Financial Holdings Ltd. on February 8, 2022. The transaction also included participation from returning investors The Standard Bank of South Africa Limited, Glilot Capital Partners, Viola FinTech, Renegade Partners Group LLC, OurCrowd Ltd., BNP Paribas SA, Opera Tech Ventures SLP; a fund managed by BNPP Capital Partners, Moneta Capital Partners, individual investors Yehuda Zisapel, Jerry Yang and additional angel investors. The company has raised $62,000,000 in funding till date.

Positive

AgriTask Ltd. announced that it has received $26 million in funding from Liechtensteinische Landesbank Aktiengesellschaft, Bridges Israel Ltd., Smart Agro - Limited, and another investor

2022-02-03 00:00:00

AgriTask Ltd. announced that it has raised $26 million in a round of funding led by new investor Liechtensteinische Landesbank Aktiengesellschaft on February 3, 2022. The transaction also involved participation from InsuResilience Investment Fund, new investors Bridges Israel Impact Investment Fund, a fund managed by Bridges Israel Ltd., Smart Agro - Limited.

Positive

tipa-corp ltd announced that it has received $70 million in funding from Millennium Food Tech Limited Partnership, Meitav DASH Investments Ltd, Migdal Insurance and Financial Holdings Ltd. and other investors

2022-01-02 00:00:00

tipa-corp ltd announced that it has raised $70 million in an equity round of funding co-led by returning investor Millennium Food Tech Limited Partnership for $4 million for 3.3% stake after the transaction and Meitav DASH Investments Ltd for $26 million on January 2, 2022. The transaction included participation from other unnamed investors including Migdal Insurance and Financial Holdings Ltd. The company has raised $130 million in funding till date.

Fundamental Summary

Migdal's financial results from Q2 demonstrated decent performance, but will likely only help Migdal remain on par with its peers. It is highly likely that it will be mostly tethered to market performance and sector movements for the near term. Bottom line, Migdal's financials indicate solid performance in terms of growth and income, which leads us to believe that they may become interesting again in the next few months. But for right now, we gave the company an overall grade of 74 and a HOLD recommendation.

Migdal reported earnings results for the third quarter and nine months ended September 30, 2022. For the third quarter, the company reported revenue was ILS 1,263.54 million compared to ILS 6,745.14 million a year ago. Net income was ILS 209.73 million compared to ILS 305.97 million a year ago. Basic earnings per share from continuing operations was ILS 0.2 compared to ILS 0.29 a year ago. Diluted earnings per share from continuing operations was ILS 0.2 compared to ILS 0.29 a year ago.For the nine months, revenue was ILS 521.8 million compared to ILS 25,751.95 million a year ago. Net income was ILS 483.21 million compared to ILS 919.94 million a year ago. Basic earnings per share from continuing operations was ILS 0.46 compared to ILS 0.87 a year ago. Diluted earnings per share from continuing operations was ILS 0.46 compared to ILS 0.87 a year ago.

Business Description

Migdal, together with its subsidiaries, provides insurance, pension, and financial services for private and corporate customers in Israel. The company deals and manages pension plans, life and health insurance products, pensions, and financial business plans; and provides personal accident and mortgage insurance solutions, and savings, as well as insurance agency services. It also markets investments; operates nostro accounts; and manages financial assets, including mutual funds and portfolios, as well as engages in the investment banking and distribution activities. The company was founded in 1934 and is based in Petah Tikva, Israel. Migdal operates as a subsidiary of Eliahu Issues Ltd.

Sector Overview

Migdal is included in the Insurance according to GICS (global industry classification standard). The Insurance industry is part of the Financials sector. Relevant companies include Insurance Brokers, Life & Health Insurance Companies, Multi-line Insurance Companies, Property & Casualty Insurance Companies, and Reinsurance Companies. Migdal's industry and sector affiliation are expected to positively boost their relative likelihood to overperform the market looking forward, as they should benefit significantly from the macroeconomic environment we see now.

Fundamental Highlights


Parameter Value Change Score
Assets 192.6B 3.1% 66
Liabilities 185.1B 3.1% 70
Price to Book 0.6 12.9% 68
Cash & Equivalents 17.1B 24.7% 85
Equity 7.4B 4.7% 43
EBITDA 2.1B 23.5% 89
Total Revenues 39.8B -1.6% 92
Parameter Value Change Score
Return on Equity 15.7 25.1% 81
Net Cashflow 2.5B 1190.8% 98
Capital Expenditure -36.8M -12.1% 49
Asset Turnover 0.2 -5.1% 43
Free Cashflow Per Share 2.5 1647.3% 38
* All values are TTM

The below chart reflects Migdal's birds-eye view on its performance with respect to its peers, the company's fillings as reported or to a similar industry, market cap, and country of origin. While Migdal's peer average final assessment score stands on 63, Migdal's score is 74.

  •  MGDL
  •  Peers average
Name Market Cap Balance Sheet Income Statement Cash Flow Rating Final Assessment mc_sort Hidden
The Phoenix Holdings Ltd. 9.9B 83 50 46
Hold
66
66 0 1
Harel Insurance Investments & Financial Services Ltd 7.1B 63 51 65
Underperform
54
54 1 1
Menora Mivtachim Holdings Ltd 4.7B 86 97 60
Buy
84
84 2 1
Clal Insurance Enterprises Holdings Ltd. 4.6B 53 46 45
Underperform
42
42 3 1
I.D.I. Insurance Company Ltd. 1.2B 74 47 76
Hold
68
68 4 1

Macro Environment

Neutral
79

Typically, the stock market in Israel will react to recent economic events, as well as be influenced by the sentiment in other major economies around the world, such as the United States, European Union, and China. Our assessment is that these two events may influence global market sentiment. On the negative side we have the decline in personal consumption, and on the positive side we have the government debt is being repaid at an unprecedented rate.

Positive government debt is being repaid at an unprecedented rate

In the last 12 months, the government budget operated with a surplus of 0.4% of GDP. Net redemptions in the last 12 months amounted to approximately NIS 47.6 billion, mainly in the local bond market. This is an unprecedented amount that is expected to significantly reduce the debt to GDP ratio.

Negative decline in personal consumption

Prices rose by 0.2% in September above early forecasts, indicating a strengthening inflation environment. A rise in inflation and interest rates has also increased the total mortgage repayments in the past year to an unprecedented amount of NIS 13 billion, equivalent to roughly 1.5% of household annual personal consumption. The effects of all of these are expected to moderate future demand and harm private consumption.

Besides the events we mentioned, there are also specific events related to the Insurance industry of which Migdal Insurance and Financial Holdings Ltd. is a part. As a result, we believe that the rising interest rate is a positive event that will continue to support the industry in the future, whereas the rising inflation may cloud the sector's shares.

Positive rising interest rate

From a historical point of view, the finance sector functions well when interest rates are rising, mainly due to the increase in loan repayments from lenders. Also, insurers often reinvest policyholder premiums into bond instruments, allowing them to profit when Treasury yields increase.

Negative rising inflation

The sudden increase in inflation is generally regarded as the most painful since it takes companies several quarters to pass on higher input costs to consumers. Historically, companies traded in the Insurance industry have been hit by high inflation times due to increased operating expenses and decreased revenues.

In considering the current macro environment and the risks that might affect Migdal Insurance and Financial Holdings Ltd. stock, we came to the conclusion that recent events aren't likely to affect the company's performance in the short term, and thus rated Migdal Insurance and Financial Holdings Ltd. macro environment with the score of 79.

Technical Analysis

When trying to optimize the timing of an investment, it's critical to analyze whether the stock looks overbought or oversold, and in which direction the momentum is moving. Migdal's stock is now priced above its 5-day, but below its 50-day and 200-day moving average, while its MACD (moving average convergence divergence) indicates that the stock's price movement momentum is weakening. Historically, this is a positive setup in the near-term. Meanwhile, looking at the Stochastic Oscillator and RSI (relative strength index), Migdal's stock indicates that it's likely oversold. Overall, these technical indicators signal negative momentum. Therefore, this stock received a cumulative TA (technical analysis) score of 47.

Bearish 47
Close Price 4.44
52W Low 4.02
52W High 6.19
5D MA 4.37
50D MA 4.54
200D MA 5.22
MACD -0.03
RSI 0.56
STOCH 97.14

Balance Sheet Analysis

All in all, looking at the balance sheet, Migdal's financial health appears good. Migdal's balance sheet neither stood out as being particularly strong or weak relative to its peers. Migdal's management was effective in improving its cash and cash equivalents metrics, which now sit at 17.1B. This represents 24.7% change from the last reporting period. This impressive growth, specifically in contrast to their industry peers' performance, should support an upswing in the company's stock price. Therefore, its cash and cash equivalents movement earned a score of 85. Also, Migdal is doing a good job of keeping its liabilities under control and growing intelligently. At filing, their liabilities were 185.1B, representing 3.1% change from the previous period. These liabilities changes appear balanced compared to their peers and project the message that management is capable and focused on balancing asset growth, resource allocation, and growing liabilities. These results statistically lead to positive movement in stock prices, so we rated its liabilities movement component 70. On the other hand, Equity, jumped out as looking rather underwhelming. Migdal management produced disappointing equity metrics this period, which stood at 7.4B, representing a 4.7% change. This parameter often affects companies in the same industry and market capitalization by up to 6.5%. This performance is significantly less impressive than its peers and competitors. Therefore, their equity movement component earned a score of 43. Therefore, it received a score of 68.

Parameter Value Change Score
Assets 192.6B 3.1% 66
Liabilities 185.1B 3.1% 70
Price to Book 0.6 12.9% 68
Cash & Equivalents 17.1B 24.7% 85
Equity 7.4B 4.7% 43
* All values are TTM

The below chart describes Migdal's performance as reflected on its balance sheet with respect to its peers. While Migdal received a balance sheet score of 68, the average of its peers stands on 72.

  •  MGDL
  •  Peers average
Name Market Cap Liabilities Movement Asset Change Equity/Intangibles Adjustments Cash & Equivalents Book Value Momentum Balance Sheet mc_sort Hidden
The Phoenix Holdings Ltd. 9.9B 65.0 67.0 92.0 77.0 82.0 83 0 1
Harel Insurance Investments & Financial Services Ltd 7.1B 55.0 87.0 88.0 87.0 52.0 63 1 1
Menora Mivtachim Holdings Ltd 4.7B 79.0 69.0 90.0 64.0 83.0 86 2 1
Clal Insurance Enterprises Holdings Ltd. 4.6B 61.0 75.0 39.0 79.0 46.0 53 3 1
I.D.I. Insurance Company Ltd. 1.2B 51.0 77.0 67.0 56.0 81.0 74 4 1

Income Statement Analysis

Migdal's income statement showed strong financials, specifically Revenue Efficiency and EBITDA. Migdal's financials reveal an interesting trend for their revenue efficiency. This parameter often affects companies in the same industry and market capitalization by up to 2.0%. Their industry-leading revenue efficiency makes a strong case for upward pressure on its's stock price. As a result, its revenue efficiency earned a score of 92. On the other hand, Return Factors, jumped out as looking problematic. Return factors metrics and ratios were disappointing in this report. Migdal reported a return on equity (ROE) ratio of 15.7, representing a change of 25.1% from the last report.change of 25.1% from the previous period. This metric might have a 10.8 percent impact on companies in the same industry and with the same market capitalization. These numbers show that management has been unsuccessful in fostering appropriate growth related to return on assets and return on equity momentum relative to their peers. Its return factors (ROA & ROE) components, therefore, received a grade of 81. their income statement received an overall score of 85.

Parameter Value Change Score
EBITDA 2.1B 23.5% 89
Total Revenues 39.8B -1.6% 92
Return on Equity 15.7 25.1% 81
* All values are TTM

The below chart describes Migdal's performance as reflected on its income statement with respect to its peers. While Migdal received a income statement score of 85 , the average of its peers stands on 58.

  •  MGDL
  •  Peers average
Name Market Cap Revenue Momentum Earning Movement Return Factors Momentum Income Statement mc_sort Hidden
The Phoenix Holdings Ltd. 9.9B 97.0 45.0 44.0 50 0 1
Harel Insurance Investments & Financial Services Ltd 7.1B 97.0 47.0 45.0 51 1 1
Menora Mivtachim Holdings Ltd 4.7B 96.0 76.0 94.0 97 2 1
Clal Insurance Enterprises Holdings Ltd. 4.6B 97.0 43.0 40.0 46 3 1
I.D.I. Insurance Company Ltd. 1.2B 64.0 45.0 48.0 47 4 1

Cash Flow Analysis

Migdal appears likely to maintain its cash flow metrics and momentum going forward. Migdal's management was effective in improving their net cash flow, which now sits at 2.5B and represents a 1190.8% change from the previous report. Their net cash flow metrics are especially remarkable relative to their peers. Hence, its net cash flow earned a score of 98. Also, Migdal's management was effective in improving its CapEx, which now sits at -36.8M and represents -12.1% change from the previous report. This performance is all the more impressive relative to their peers and competitors. The company's CapEx movement, therefore, received a grade of 49. On the other hand, Free Cash flow, jumped out as looking problematic. Migdal did a poor job related to generating and maintaining strong free cash flow this period, which stood at 2.5, representing a 1647.3% change from the previous filing. Companies in the same sector and market capitalization will usually be affected by up to 7.9 percent by this parameter. their free cash flow situation appears to be much weaker than their peers. Management needs to do a better job balancing cash flow, asset growth, and resources allocations in general. Consequently, their free cash flow movement received a grade of 38. Because their management is doing an excellent job managing these critical metrics, the cash flow was given a score of 70.

Parameter Value Change Score
Net Cashflow 2.5B 1190.8% 98
Capital Expenditure -36.8M -12.1% 49
Asset Turnover 0.2 -5.1% 43
Free Cashflow Per Share 2.5 1647.3% 38
* All values are TTM

The below chart describes Migdal's performance as reflected on its cash flow with respect to its peers. While Migdal received a cash flow score of 70, the average of its peers stands on 58.

  •  MGDL
  •  Peers average
Name Market Cap Cashflow Momentum Free Cashflow Growth Capital Expenditure Growth Assets Factors Momentum Cash Flow mc_sort Hidden
The Phoenix Holdings Ltd. 9.9B 54.0 79.0 47.0 38.0 46 0 1
Harel Insurance Investments & Financial Services Ltd 7.1B 97.0 37.0 53.0 48.0 65 1 1
Menora Mivtachim Holdings Ltd 4.7B 42.0 92.0 95.0 48.0 60 2 1
Clal Insurance Enterprises Holdings Ltd. 4.6B 48.0 90.0 41.0 38.0 45 3 1
I.D.I. Insurance Company Ltd. 1.2B 84.0 37.0 95.0 89.0 76 4 1

This report, prepared and provided by Deshe Labs Ltd ("Deshe"), is intended for general guidance and information purposes only and under no circumstances is tailored to a specific factor or variable related to its reader or intended to be used, construed, or considered as financial or investment advice, an offer, a solicitation of any offer, a recommendation, or an offer to invest in, sell or buy the securities mentioned in this report or other form of a financial asset or as a marketing communication under FCA Rules. For the full disclaimer, click here.