Credit: Shutterstock photoOn Aug 19, 2016, shares of National Interstate CorporationNATL hit a 52-week high of $34.49, driven by strong second-quarter 2016 results. About 0.01 million shares exchanged hands in the last trading session and the stock finally closed at $32.42. Year to date, the stock has returned 21.41%, comparing favorably with 4.61% by the Nasdaq.
In the second quarter, National Interstate delivered operating earnings per share of 51 cents that surpassed the Zacks Consensus Estimate by 27.5%. The bottom line also improved 59% year over year. This Zacks Rank #1 (Strong Buy) property and casualty insurer delivered positive surprises in two of the last four quarters, with an average beat of 7.59%.
Increased invested assets improved investment income in the quarter. Coupled with increased premiums earned, revenues rose 5% in the quarter.
Underwriting results improved on the initiatives that the company has been taking over time, including enhancements to claims and risk management as well as managing reserving practices. Combined ratio improved 100 bps year over year in the second quarter.
With respect to balance sheet strength, while cash and invested assets increased at quarter end, long-term debt level remained flat with 2015 end. Long-term debt to equity ratio exhibited an improvement of 20 basis points. Book value per share increased 6.5% over year-end 2015.
Additionally, National Interstate entered into a merger agreement with American Financial Group, Inc. (AFG) in the second quarter. Pursuant to this agreement, American Financial will acquire 49% of the company's common shares. As a result, National Interstate's shareholders will receive $32 in cash for each share they hold as well as a special dividend of 50 cents per share, upon closure of the merger.
The Zacks Consensus Estimate saw an uptrend as estimates moved north over the last 30 days driven by the positives. The same moved up 7.6% to $1.70 for 2016 and 7.3% to $1.77 for 2017. The expected long-term growth is currently pegged at 10%.
NATL INTERST CP Price and Consensus
NATL INTERST CP Price and Consensus | NATL INTERST CP Quote
Other Stocks to Consider
Investors interested in the property and casualty industry can also look at NMI Holdings, Inc. NMIH , Allied World Assurance Company Holdings, AG AWH and Argo Group International Holdings, Ltd AGII . Each of these stocks shares the Zacks Rank with National Interstate.
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ARGO GROUP INTL (AGII): Free Stock Analysis Report
NATL INTERST CP (NATL): Free Stock Analysis Report
ALLIED WORLD AS (AWH): Free Stock Analysis Report
NMI HOLDINGS-A (NMIH): Free Stock Analysis Report
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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
