American Financial Group Inc.
) has put together an impressive 17 straight quarters of positive
earnings surprises, averaging a beat of 12.5%. Most recently, this
property and casualty insurer surprised by 39% in its third
quarter. The quarterly announcement also included the declaration
of a special dividend. Additionally, with a price-to-book (P/B)
ratio of just 0.78, this Zacks Rank # 1 (Strong Buy) is a true
Based on its progress to accommodate the expected pre-tax loss from
Hurricane Sandy, the company narrowed its earnings per share
projection for 2012 to between $3.10 and $3.30 from $3.10 to $3.50
earlier. The Zacks Consensus Estimate for 2012 is currently pegged
at $3.27, near the high end of the company's guidance range.
American Financial declared a special dividend of 25 cents per
share on December 7, in addition to an 11.4% hike in its regular
quarterly dividend on October 1.
The company also has 4.5 million shares remaining under its buyback
authorization and expects total share repurchased for 2012 to be
approximately $450 million.
On October 29, American Financial reported third quarter earnings
of 82 cents per share, which was 39% above the Zacks Consensus
Estimate. The upside was largely due to higher income in the
Annuity and Supplemental Insurance Group. However, the earnings
result fell short of last year.
Operating revenue was $1.5 billion, which outpaced the Zacks
Consensus Estimate by 47% and the year-ago number by 0.2% on higher
property and casualty premium and investment income.
American Financial has not yet announced its fourth-quarter
earnings release date. The Zacks Consensus Estimate is 67 cents on
revenues of $795 million.
Positive Earnings Estimate Revisions
For 2013, the Zacks Consensus Estimate increased 1.1% to $3.71 over
the last 60 days, suggesting a year-over-year increase of 13.3%.
Along with a very attractive P/B multiple, American Financial has a
price-to-earnings (P/E) ratio of 11.1 (a P/B ratio under 3.0 and
P/E ratio below 15.0 indicate value).
Meanwhile, the company has a 1-year return on equity (ROE) of 7.5%,
lower than its peer group average of 8.1%.
Based in Cincinnati, Ohio, and founded in 1872, American Financial
Group provides property and casualty insurance, in addition to
engaging in sale of conventional fixed and fixed-indexed annuities
in the education, bank and individual markets in the United States.
With a market cap of $3.71 billion, the company competes with CNA
Financial Corporation (
), MetLife Inc. (
) and The Travelers Companies Inc. (
), among others.
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