Why the Upgrade?
Hallmark Financial has been witnessing positive earnings estimate revisions since the release of its third-quarter financials. The company is benefiting from favorable rate trends and various underwriting actions implemented across most businesses. Moreover, the balance sheet remains sturdy with a healthy capital position and investment portfolio.
Lower expenses have also supported improvement in combined and net loss ratios. Although the top line faces challenges on account of a low interest rate environment and difficult comps, the long-term growth story appears compelling for this this property-casualty and specialty insurer.
On Nov 7, Hallmark Financial reported third-quarter operating earnings per share of 18 cents. Although it came lower than the year-ago equivalent of 32 cents, with this, the company delivered four straight quarters of positive earnings surprises, recording an impressive average beat of 189.2%.
An upward trend in estimates further raises optimism. The Zacks Consensus Estimate for 2014 surged 116.7% to earnings of 65 cents per share in the last 7 days, 51.2% higher than its 2013 equivalent. Likewise, the estimate for 2015 is pegged at 80 cents a share, spiking 77.8% over the same period and up 23.1% year over year. Meanwhile, no downward revision in estimates was witnessed for both the years.
Hallmark Financial Hits 52-Week High
Shares of Hallmark Financial also scaled a new 52-week high of $11.97 on Nov 17, escalating 33.4% since the beginning of 2014. While about 43.8K shares exchanged hands in the latest trading session, the average volume of shares traded over the last three months stands at approximately 29.59K.
Yesterday's closing price represents a strong one-year return of 31.3%, against 17.2% clocked by the Nasdaq index. A steady growth outlook should continue to score well with ratings agencies and maintain a positive sentiment among shareholders.
Other Promising Picks
Investors interested in the insurance sector may also consider players like AmTrust Financial Services Inc. ( AFSI ), Arch Capital Group Ltd. ( ACGL ) and Atlas Financial Holdings Inc. ( AFH ). All these stocks sport the same Zacks Rank as Hallmark Financial.