Navigators Group: A Strong Buy - Analyst Blog
On Oct 9, Zacks Investment Research upgraded Navigators Group Inc. ( NAVG ) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Navigators Group has been experiencing rising earnings estimates on the back of improved market trends following its robust second-quarter 2013 results. Moreover, strong capitalization and a healthy underwriting profile are deemed impressive.
Additionally, this leading property-casualty insurer delivered positive earnings surprises in the last 4 quarters with an average beat of 116.2%. On Aug 7, Navigators Group reported second-quarter 2013 operating earnings per share of 82 cents, which outpaced the Zacks Consensus Estimate of 76 cents but lagged the year-ago quarter number of 88 cents.
While year-over-year growth of 4.3% in net written premiums boosted the top line, higher-than-expected loss, loss adjusted and operating expenses negated the bottom-line growth. However, underwriting ratios improved, reflected by a combined ratio of 97.7% against 98.1% in the year-ago quarter. Moreover, lower net investment income was more than offset by improved operating cash flow and an appreciated asset position.
Navigators Group consistently focuses on boosting its insurance and underwriting efficiencies through prudent, conservative, yet comprehensive risk management. Meanwhile, reduced debt levels reflect a healthy capital position and financial leverage, which also scores well with the investors and ratings agencies. We foresee steady growth in the future as well.
Based on Navigators Group's fundamental strength and capital management, the Zacks Consensus Estimate for both 2013 and 2014 inched up 0.6% each to $3.10 per share and $3.44 a share, respectively, in the last 60 days. Furthermore, no downward revision in estimates was witnessed for both the years.
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