On Mar 12, we upgraded our recommendation on
) to Outperform based on the remarkable improvement in its
operating and underwriting performance.
Why the Upgrade?
Amerisafe reported fourth-quarter 2012 operating earnings per
share of 49 cents on Feb 27, which outpaced the Zacks Consensus
Estimate of 39 cents and the prior-year quarter's earnings of 32
cents. Total operating revenue also increased 14.3% year over
year to $85.6 billion and also exceeded the Zacks Consensus
Estimate of $83.0 billion.
Amerisafe witnessed quite a boost over the last 30 days,
signifying noticeable growth ahead. The Zacks Consensus Estimate
for 2013 rose 6% to $1.95 per share, whereas for 2014, it grew
5.7% to $2.22 per share. Meanwhile, the Most Accurate Estimate
for Amerisafe's 2013 earnings stands at $2.10, resulting in a
positive ESP (read:
Zacks Earnings ESP: A Better Method
) of 7.7%.
Consequently, with the Zacks Consensus Estimates for both 2013
and 2014 showing strong upward pressure on the stock in the near
term, the company now has a Zacks Rank #1 (Strong Buy).
What is the cause for the strong positive bias on the company?
Apart from strong fourth quarter results, Amerisafe has employed
a proactive and disciplined underwriting approach. Additionally,
prudent capital management have contributed to the favorable
growth of book value per share and return on equity, which are
significant growth measures. The initiation of cash dividend
further injects shareholders' confidence in the stock.
Going ahead, we believe that Amerisafe is well positioned to
capitalize on the changing market dynamics, wherein the workers'
compensation market remains firm as carriers re-evaluate their
positions, thereby enhancing the company's fundamental growth. A
strong financial strength rating further augurs decent long-term
Other Stocks to Consider
Apart from Amerisafe, other stocks that are outperforming in
the insurance sector include
CNO Financial Group Inc.
XL Group Plc
). All these stocks carry a Zacks Rank #1 (Strong Buy).
AEGON N V (AEG): Free Stock Analysis Report
AMERISAFE INC (AMSF): Free Stock Analysis
CNO FINL GRP (CNO): Free Stock Analysis
XL GROUP PLC (XL): Free Stock Analysis Report
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