On Jul 5, 2013, Zacks Investment Research upgraded
AmTrust Financial Services Inc.
) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
AmTrust has been witnessing rising estimates on the back of
improved first quarter 2013 results. The company's pliant
underwriting platform and improved inorganic growth warrant
optimism in this stock. Additionally, this global specialty
property-casualty insurer delivered positive earnings surprises
in all of the last 4 quarters with an average beat of 9.1%.
On May 1, AmTrust reported first-quarter 2013 operating
earnings per share of 81 cents, remarkably beating the Zacks
Consensus Estimate of 73 cents and the year-ago quarter figure of
The upside was primarily attributable to 37.1% top-line
growth, which was driven by a 29.9% upsurge in net earned
premiums along with significantly higher commissions, service and
fee income. Even net investment income escalated 24.8%, although
higher loss and loss adjusted expenses coupled with underwriting
expenses were partial dampeners.
Additionally, we believe that the recent acquisitions of
Sequoia Insurance and Mutual Holdings coupled with ratings
affirmation bode well for future growth prospects. AmTrust also
maintains a healthy balance sheet and adequate liquidity, with a
modest debt-to-capital ratio of 17% at the end of May 2013 and
sturdy interest coverage ratios, despite its inorganic growth
strategy. An efficient capital deployment via dividend payouts
and share buybacks further instill confidence among
Based on Endurance's fundamental strength and underwriting
profitability, the Zacks Consensus Estimate for 2013 rose 0.6% to
$3.23 per share in the last 60 days. The estimate for 2014 is
pegged at $3.73, up 1.9% in the last 60 days. Meanwhile, no
downward revision in estimates was witnessed for both the
Moreover, the Most Accurate Estimate for AmTrust's 2013
earnings stands at $3.25 a share, resulting in a positive
Earnings ESP (Read:
Zacks Earnings ESP: A Better Method
) of 0.62%.
Other Insurers Worth a Look
Apart from Endurance, other stocks that are outperforming in
the insurance sector include
Hilltop Holdings Inc.
HCI Group Inc.
American Safety Insurance Holdings Ltd.
). All these stocks carry a Zacks Rank #1 (Strong Buy).
AMTRUST FIN SVC (AFSI): Free Stock Analysis
AMER SAFETY INS (ASI): Free Stock Analysis
HCI GROUP INC (HCI): Free Stock Analysis
HILLTOP HLDGS (HTH): Free Stock Analysis
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