Riding on a strong growth momentum, shares of
AmTrust Financial Services Inc.
) reached a new 52-week high at $47.10 on May 22. This specialty
property-casualty insurer's shares rose about 7.5% since the
company reported first-quarter 2014 results on May 1, with a
positive earnings surprise of 33.3%.
The momentum of this Zacks Rank #1 (Strong Buy) stock is fueled
by prudent risk and debt management as well as an improved
operating leverage and capital position, all paving the way for
efficient capital deployment.
Yesterday's closing price represents a strong one-year return of
about 57.4% against 18.7% clocked by the Nasdaq index. Average
volume of shares traded over the last three months stands at
AmTrust Financial reported first-quarter 2014 operating earnings
per share (EPS) of $1.24, which exceeded the Zacks Consensus
Estimate of 94 cents. EPS was also 67% higher than the year-ago
quarter figure of 74 cents.
Results reflected an 89% year-over-year accretion in top line,
which more than offset the increase in underwriting and acquisition
expenses, overall resulting in improved combined ratio, margins and
The consistent price appreciation of this stock also mirrors the
rally in the insurance industry, which has seen about 60%
participants gaining yesterday. Conservative investment strategies
and disciplined capital management have also been cushioning muted
investment returns for AmTrust Financial.
The ongoing economic recovery along with improvement in claims
paying-ability, inorganic growth and market demand should further
help the company strengthen its competitive edge in the upcoming
Given its history of resilient growth and equally strong core
growth outlook, we believe AmTrust Financial can be an ideal pick
for your portfolio if you are considering investment in insurance
stocks. Over the medium- to long term, we expect this stock to hit
new highs and generate healthy returns.
Other insurers that are worth a look include
Atlas Financial Holdings Inc.
Aspen Insurance Holdings Ltd.
Allied World Assurance Company Holdings AG
). All these stocks sport the same Zacks Rank as AmTrust
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ATLAS FINL HLDG (AFH): Free Stock Analysis
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ALLIED WORLD AS (AWH): Free Stock Analysis
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