Aspen Insurance Holdings Limited
) hit a new 52-week high of $41.43 on Dec 31, 2013.
The momentum was driven by continued strong results by the
company. The insurer delivered positive earnings surprises in 3
out of the last 4 quarters with an average beat of 28.5%. The
formation of Silverton Re, which should enrich the company's
global reinsurance business, also contributed to this growth
The company's strong operating performance in 2013 is also
reflected in its share price growth, which has clocked an
increase of 29.7% over the past one year.
Analysts have also shown their optimism regarding this Zacks Rank
#1 (Strong Buy) stock, as is evident in upward estimate
revisions. Over the last 30 days, estimates moved north lifting
the Zacks Consensus Estimate by 2% to $3.65 per share
(representing a year-over-year improvement of 8.3%). Over the
same period, the Zacks Consensus Estimate for 2014 also increased
7.6% to $3.53 per share.
We expect Aspen Insurance's 2014 earnings to gain from the
formation of Silverton Re as this long-term growth strategy will
create further opportunities in the alternative reinsurance
market while also strengthening its operational activities in
Earnings are also expected to benefit from the company's
disciplined capital management strategy witnessed by its regular
dividend payouts and share repurchase activities. Strong
fundamentals have also allowed Aspen Insurance to score strongly
with the credit rating agencies.
We expect Aspen Insurance to beat estimate when it reports its
fourth-quarter 203 earnings results on Feb 6. This is because our
proven model shows that Aspen Insurance has the right combination
of a healthy Earnings ESP (+7.37%) and a favorable Zacks
Rank. The Zacks Consensus Estimate for the fourth quarter
is pegged at 95 cents per share, representing an enormous
year-over-year improvement of 734.7%.
Further, valuation looks reasonable for Aspen Insurance .The
shares are trading at about 20% discount to the industry average
on a forward price-to-earnings basis and about 47% discount on a
price-to-book basis. While return on equity is 18.7% lower than
the industry average, return on assets was more than 2.5 times of
the industry average.
Other Stocks to Consider
Other players in the property and casualty insurance space which
look attractive at current levels include
Allied World Assurance Co.
Cincinnati Financial Corp.
Fidelity National Financial, Inc.
). All these stocks carry the same Zacks Rank as Aspen
ASPEN INS HLDGS (AHL): Free Stock Analysis
ALLIED WORLD AS (AWH): Free Stock Analysis
CINCINNATI FINL (CINF): Free Stock Analysis
FIDELITY NAT FI (FNF): Free Stock Analysis
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