On Aug 14, Zacks Investment Research downgraded
Meadowbrook Insurance Group, Inc
) to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Meadowbrook Insurance has witnessed downward estimate revisions
after missing second-quarter 2014 expectations. The company
delivered negative surprise in three of the last four quarters with
an average of negative 83.27%.
On Aug 5, Meadowbrook Insurance reported second-quarter earnings
per share of 7 cents, missing the Zacks Consensus Estimate by 30%.
Revenues declined year over year due to lower premiums. Net
investment income witnessed a decline due to reduced reinvestment
Expense ratio increased due to expenses associated with the use of
an unaffiliated "A" rated insurance company for policy issuance. In
addition, the company's decision to exit under-performing
businesses led to lower earned premiums, added to its woes.
Moreover, Meadowbrook Insurance narrowed its expectations. Gross
written premium is presently expected between $740 million and $760
million. Net operating income is anticipated in the range of $25.5
to $27.5 million, or 51-55 cents per share. The Zacks
Consensus Estimate of 47 cents falls shy of the company guidance.
Combined ratio is expected to be within 100.3% to 100.8%.
The Zacks Consensus Estimate for 2014 decreased 2.1% to 47 cents
per share over the last 30 days, as 1 of 2 estimates moved south.
For 2015, 1 of 3 estimates was revised downward, lowering the Zacks
Consensus Estimate by 5% to 57 cents per share over the same time
Other Stocks to Consider
While we currently prefer to avoid Meadowbrook Insurance,
better-ranked multiline insurers worth reckoning include FBL
Financial Group Inc. (
), Fortegra Financial Corp. (
) and Radian Group Inc. (
). All these stocks hold a Zacks Rank #2 (Buy).
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MEADOWBROOK INS (MIG): Free Stock Analysis
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