Earnings estimates for
Enstar Group Limited
) have been trending higher following last month's third quarter
report, which included a 9.4% positive earnings surprise. This
provider of management consulting services posted three straight
quarters of positive earnings surprises with an average beat of
Moreover, with a price-to-book (P/B) ratio of just 0.84, this Zacks
# 1 Rank (Strong Buy) is a true value pick.
Strong Third Quarter
On Nov 8, Enstar Group reported third quarter earnings of $1.16 per
share, which was 9.4% above the Zacks Consensus Estimate and up
nearly 76% from last year.
Income generated in the quarter was $49.9 million, which increased
more than four-fold from the year-ago quarter. A combination of
higher consulting fees, net investment income and net realized and
unrealized gains drove the income.
On Sep 6, Enstar Group entered into an agreement to buy Household
Life Insurance Company and HSBC Insurance Company from Household
Insurance Group Holding Company, an affiliate of HSBC Holdings plc
(HSBC). It will acquire the assets for $181 million in cash.
Moreover, at the end of last month, shareholders of SeaBright
Holdings Inc. (
) approved the merger with Enstar Group.
Positive Earnings Estimate Revisions
The Zacks Consensus Estimate for 2012 increased 7.3% to $11.83 in
the past 60 days, suggesting a year-over-year increase of
approximately 16.4%. For 2013, the Zacks Consensus Estimate
advanced by 4.8% to $13.20 over the same time frame, implying a
year-over-year increase of 11.5%.
Along with a very attractive P/B multiple, Enstar Group has a
price-to-earnings (P/E) ratio as low as 8.9 (a P/B ratio under 3.0
and P/E ratio below 15.0 indicate value).
Moreover, the company has a 1-year return on equity (ROE) of 9.7%,
higher than its peer group average of 6.5%.
Headquartered in Hamilton, Bermuda, and founded in 2001, Enstar
Group engages in acquiring and managing insurance and reinsurance
companies in run-off and portfolios of insurance and reinsurance
business in run-off. It also provides management, consultancy and
other services to the insurance and reinsurance industry. With a
market capitalization of $1.74 billion and operations in the United
Kingdom, the United States, Europe, Australia and Bermuda , the
company competes with Berkshire Hathaway Inc. (
) and Leucadia National Corp. (
), among others.
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