On Feb 26, 2014, Zacks Investment Research upgraded
American Financial Group Inc.
) to a Zacks Rank #1 (Strong Buy).
AMER FINL GROUP (AFG): Free Stock Analysis
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EMC INSURANCE (EMCI): Free Stock Analysis
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Why the Upgrade?
Following a strong fourth-quarter 2013 performance, American
Financial witnessed upward estimate revisions. Over the past 30
days, the Zacks Consensus Estimate for 2014 moved north by 2.6%
to $4.71 per share as 2 of 4 estimates were revised upward.
For 2015, the same moved up by 6.2% to $5.24 per share as 1 among
5 estimates moved the positive direction over the same time
This property and casualty insurer delivered positive surprise in
3 of the last 4 quarters with an average of 9.3%. The expected
long term growth rate for the stock is 8%.
American Financial reported fourth-quarter operating earnings per
share of $1.28, which comfortably beat the Zacks Consensus
Estimate by 4.1%. On a year-over-year basis earnings surged 91%.
The earnings beat came on the back of record earnings from the
company's Annuity segment and significantly higher underwriting
profitability in its Specialty Property and Casualty insurance
Total revenue of $1.36 billion increased 12.7% year over year,
while also easily outpacing the Zacks Consensus Estimate of $0.89
American Financial exhibited a strong performance in 2013
benefiting from improving industry trends. A benign catastrophe
year along with increasing insurance pricing led to overall
earnings growth. The company's combined ratio which has trended
lower than the industry standards is also commendable.
Going ahead, American Financial's bottom line should benefit from
the recent acquisition of Summit Holdings, which will expand its
workers' compensation business. Improving insurance rates, low
loss cost ratio, strong balance sheet, low leverage and a
disciplined capital management will further aid the company
results going forward.
Other Stocks to Consider
Other insurers which sport the same Zacks Rank as American
Financial and are worth considering include
AmTrust Financial Services, Inc.
EMC Insurance Group Inc.
Global Indemnity plc