On Jun 20, 2013, Zacks Investment Research upgraded
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Amerisafe has been experiencing rising earnings estimates on
the back of improved results in the past two quarters. Moreover,
the company's strong underwriting capabilities as well as
improved capital position and coverage ratios have been
impressive, also reflected by the dividend initiated early this
The long-term expected earnings growth rate for this specialty
provider of workers' compensation insurance is pegged at 11.0%,
higher than peer average of 10.1%.
On May 1, Amerisafe reported first-quarter 2013 operating
earnings per share of 47 cents, which came at par with the Zacks
Consensus Estimate but higher than the prior-year quarter number
of 45 cents.
Results were supported by 9.9% growth in operating revenues,
driven by higher premiums and underwriting results. Although
operating expenses and net investment income deteriorated,
combined ratio improved to 94.7% from 96.0% in the year-ago
quarter. Even book value per share increased 7.2% at Mar
Overall, 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. The pricing
environment and industry demand has also improved, as reflected
by higher premiums and profitability.
Moreover, prudent capital management, expanded share
repurchase plan, dividend initiation and affirmation of a strong
financial strength rating augur decent long-term growth.The
creditworthiness of the company also helps retain investors'
confidence on the stock.
Based on Amerisafe's fundamental strength and underwriting
profitability, the Zacks Consensus Estimate for 2013 rose 3.0% to
$2.04 per share in the last 60 days. The estimate for 2014 is
pegged at $2.48, up 6.9% in the last 60 days. Meanwhile, no
downward revision in estimates was witnessed for both the
Other Stocks to Consider
Apart from Amerisafe, other stocks that are outperforming in
the insurance sector include
Hilltop Holdings Inc.
Montpelier Re Ltd.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
AMERISAFE INC (AMSF): Free Stock Analysis
HILLTOP HLDGS (HTH): Free Stock Analysis
MARKEL CORP (MKL): Free Stock Analysis Report
MONTPELIER RE (MRH): Free Stock Analysis
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