Homeowners Choice, Inc.
(
HCI
) has delivered positive earnings surprises for six consecutive
quarters with an average beat of 47%. With expected earnings growth
of 103.8% in 2012 and 24.8% in 2013, this Zacks #1 Rank (Strong
Buy) property and casualty insurer offers solid growth
opportunities.
Third Quarter Results
On November 6, Homeowners Choice reported third quarter net income
of 27 cents per share, nearly 4% above the Zacks Consensus Estimate
and in line with the year-ago earnings.
Revenue jumped 55% year over year to $31 million, driven by a 65%
surge in net premiums earned and a 47% increase in policy fee
income.
Gross premium earned shot up 67.3%, driven by policies acquired
from HomeWise Insurance Company.
Loss ratio was 49.1%, down 720 basis points year over year. Expense
ratio of 37.1% was up 480 basis points from the year-ago quarter.
On October 19, the board of directors approved a 12.5% increase in
its dividend along with a special dividend. The increased dividend
of 22.5 cents per share and the special dividend of 10 cents will
be paid on December 21 to shareholders of record on November 16.
Positive Estimate Revisions
The Zacks Consensus Estimate for 2012 is currently pegged at $2.49,
up 1.2% over the last 30 days as 2 of 3 estimates moved north. This
suggests a year-over-year increase of 103.8%.
All three estimates for 2013 moved higher in the same timeframe,
boosting the Zacks Consensus Estimate by 26.5% to $3.10. This
represents a year-over-year increase of 25%.
Attractive Valuation
Shares of Homeowners Choice are roughly trading at 7.9x on a
price-to-earnings basis (P/E), in line with the peer group average.
On a price-to-book (P/B) basis, shares are trading at 1.8x compared
with the peer group average of 0.8x.
Homeowners Choice has a trailing 12-month ROE of 26.4%,
significantly higher than the peer group average of 6.2%.
Headquartered in Tampa, Florida, and founded in 2006, Homeowners
Choice Inc. is an insurance holding company. The company provides
property and casualty homeowners' insurance, condominium owners'
insurance and tenants' insurance through its subsidiary. With
operations in Florida, the company employs 199 people. Having a
market capitalization of $191 million, it competes with EMC
Insurance Group Inc. (
EMCI
) among others.
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HOMEOWNERS CHCE (HCI): Free Stock Analysis
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HOMEOWNERS CHCE (HCI): Free Stock Analysis
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