The Standard Life (LSE: SLA) share price has languished over the past year. Including dividends to investors, the stock has returned -5% over the past 12 months. The company’s performance over the past five years has been even worse. The stock has underperformed the FTSE 100 by 8.4% per annum since 2015.
Following this performance, many investors might have given up on the Standard Life share price. However, the company is currently undergoing some significant changes, which could result in an improved share price performance in the years ahead.
Change at the top
Since Standard Life merged with Aberdeen Asset Management in 2017, some analysts have accused the company of lacking direction. Considering the performance of the Standard Life share price since the deal was completed, this doesn’t seem to be an unreasonable accusation.
It looks as if the company is now committed to doing something about its underperformance. Standard Life is replacing chief executive Keith Skeoch with former Citigroup banker Stephen Bird. Analysts believe this signals a shift of strategy for the group. The new CEO has lots of experience leading businesses through periods of extreme change. He’s also overseen large mergers and acquisitions at previous organisations.
This could be the start of a deal spree. That could have a significant impact on the Standard Life share price as the company returns to growth. For the past few years, the group has struggled to increase its bottom line as customers have withdrawn funds. Bringing new businesses into the fold could reduce this trend as it would give customers more options.
Standard Life share price on offer?
Unfortunately for income seekers, the change at the top could also mark an end to Standard Life’s generous dividend distribution. Analysts have been speculating that if the new CEO goes on an acquisition spree, he will cut the firm’s dividend to free up cash.
As such, income seekers may be better off looking elsewhere for income. However, if the company can return to growth with acquisitions, even if it cuts its dividend, the Standard Life share price may produce high total returns for investors over the long run.
Indeed, the company already looks deeply undervalued based on current analyst projections. City analysts believe shares in the business are worth as much as 315p. That’s an increase of nearly 20% from current levels.
As such, despite the recent underwhelming performance of the Standard Life share price, now could be an excellent time for long-term investors to consider taking a position in the stock. Change at the top may lead to a significant business shake-up. This could help the company return to growth, which may lead to improving investor sentiment over the next few years.
That would help reverse the company’s recent underperformance and may also provide headroom for management to increase cash returns to shareholders. Including the Standard Life share price in a diversified portfolio of shares could enable investors to benefit from this recovery.
