From an earnings perspective, the attraction of Authorized & Basic (LSE: LGEN) is obvious. With its 8.1% dividend yield, the FTSE 100 earnings share is a passive earnings machine offering cash usually for legions of buyers. However whereas the dividend facet of the equation seems good, the share price has carried out much less impressively.

Over the previous 5 years, the Authorized & Basic share price has not even managed to face nonetheless, falling 2%.

Which may not look like a giant dip. However when taking excessive inflation of latest years under consideration, in actual phrases it’s vital. The FTSE 100 index total has elevated 16% throughout that interval.

So is the flat Authorized & Basic share price a potential shopping for alternative for me? Or might or not it’s a warning sign that the share just isn’t as engaging as it could at first appear?

Onerous-to-please buyers

Trying on the efficiency of the monetary companies agency over the previous few years, it’s not apparent why there was so little obvious enthusiasm for the shares.

The corporate has been a large money generator, returning billions of kilos to shareholders within the type of dividends alongside a share buyback programme. It has been massively worthwhile, making post-tax earnings of over a billion kilos for some years earlier than reporting smaller earnings for the previous two years. However even then, the corporate was nonetheless solidly worthwhile. Final yr, for instance, it earned £443m after tax.

Maybe these declining earnings clarify why the Authorized & Basic share price has been falling.

Sure, the enterprise is powerful and sure, it has been making plenty of cash. However a few of the key enterprise efficiency measures have been heading within the flawed course. Not solely post-tax earnings but in addition revenues have been decrease up to now couple of years than they’d been within the few earlier years.

Lengthy-term fundamentals

Whereas the reported earnings could not appear reassuring, I believe the long-term image continues to look robust.

Reported earnings can transfer round for corporations like Authorized & Basic because of swings in underlying asset valuations.

On the subject of money technology although, the enterprise has continued performing properly. On what is understood (because of the regulatory regime) as a Solvency II foundation, final yr noticed capital technology of £1.8bn, the identical because the prior yr. That is the same as over a tenth of the agency’s present market capitalisation of £15bn.

Over time, I anticipate revenues and earnings to maneuver round, maybe considerably. However I additionally reckon that the enterprise will proceed to generate sizeable cashflows. It has a well known model, giant buyer base and deep expertise within the pensions market. I anticipate shopper demand for such merchandise to be resilient.

Relative to these money technology prospects, I believe the present Authorized & Basic share price seems like good worth. On prime of that, the corporate has a dividend yield over double the FTSE 100 common.

If I had spare money to speculate I might be comfortable to purchase the shares in the present day.