Why AmTrust Financial Is a Strong Buy - Analyst Blog


On Jul 8, 2014, Zacks Investment Research upgraded AmTrust Financial Services, Inc. ( AFSI ) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

AmTrust has been witnessing rising earnings estimates on the back of good tidings. Notably, this well-known property and casualty insurer delivered positive earnings surprises all of the last four quarters with an average beat of 21.82%. The long-term expected earnings growth rate for this stock is 15.0%.    

Last month, AmTrust Financial entered an agreement to acquire Comp Options Insurance Company, Inc. (OptaComp) a company affiliated to the Blue Cross Blue Shield of Florida. With the closure of this deal (expected by the end of 2014), AmTrust expects to capitalize on the synergies that include OptaComp's market of low-hazard workers' compensation insurance risks to gain market share.

Additionally, with a strong financial position to support, we expect AmTrust Financial to come up with more such endeavors that would enhance inorganic growth and help generate higher returns in the long run. Furthermore, AmTrust Financial's robust balance sheet as well as underwriting and operating performance prompted credit rating agency A.M. Best to affirm the Financial Strength Rating (FSR) of "A" to the holding company and Issuer Credit Rating (ICR) of  "a" to the P&C subsidiaries with a stable outlook. The "bbb" ICR and debt ratings of AmTrust Financial were affirmed as well.

AmTrust Financial's strong finances also led it to declare a quarterly cash dividend of 20 cents per share in May 2014, yielding 1.94%

The Zacks Consensus Estimate for 2014 increased 8.1% to $4.56 per share as most of the estimates were revised higher over the last 60 days. For 2015, estimates moved upward over the same time frame, lifting the Zacks Consensus Estimate by 2.1% to $4.95 per share.

Other Stocks to Consider

Other stocks that look attractive at current levels in the property and casualty space are Arch Capital Group Ltd. ( ACGL ), Alleghany Corp. ( Y ) and Endurance Specialty Holdings Ltd. ( ENH ). All these stocks have the same Zacks Rank as AmTrust.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

AMTRUST FIN SVC (AFSI): Free Stock Analysis Report

ALLEGHANY CORP (Y): Free Stock Analysis Report

ENDURANCE SPLTY (ENH): Free Stock Analysis Report

ARCH CAP GP LTD (ACGL): Free Stock Analysis Report

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Zacks Investment Research

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.

This article appears in: Investing , Business , Stocks

Referenced Stocks: AFSI , Y , ENH , ACGL



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