Recently, the Zacks Investment Research downgraded Assurant Inc . AIZ to a Zacks Rank #4 (Sell). Let's delve deeper to find out what's taking the stock down.
Shares of Assurant gained 13.4% in the last two months, underperforming the Zacks categorized Multiline Insurance industry that gained 16.2%. The Zacks Consensus Estimate has been moving south over the last 60 days. In fact, earnings are estimated to decline 33.1% for 2016. The expected long-term growth rate for the company, which is currently pegged at 8.8%, also remains below 10.2% for the industry.
Assurant Specialty Property segment, which contributes 60% to company's earnings, is witnessing lower mortgage originations. This apart, a decrease in real estate-owned volumes and declining placement rates are weighing on segmental growth. For 2016, the company expects Assurant Specialty Property's net earned premiums and net operating income to decline due to the ongoing normalization of lender-placed insurance business.
The Assurant stock is also more expensive than the industry. The stock is currently trading at a forward P/E of 21.3x, a 55.5% premium to the industry average of 13.7x. On a price-to-book basis, shares are trading at 1.2x compared with the industry average of 1.1x. Also, the price earnings growth ratio, which determines the relative trade-off between the price of a stock, the earnings generated per share, and the company's expected growth, is 2.41 comparing unfavorably with the industry average of 2.98. Assurant carries a VGM score of D. Here V stands for Value, G for Growth and M for Momentum and the score is a weighted combination of these three metrics.
With respect to earnings surprise, Assurant missed expectations in two of the last four quarters with an average miss of 7.92%. Both the top line and bottom line are expected to decline year over year in the fourth quarter of 2016.
Stocks to Consider
Health Insurance, which is a developer, distributor, and administrator of cloud-based individual health and family insurance plans, and supplemental products in the U.S., beat estimates in all of the last four quarters with an average positive surprise of 270.8%. The company sports Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here .
Primerica - a distributor of financial products to middle income households in the U.S. and Canada - delivered positive surprises in the trailing four quarters with an average beat of 6.4%. The company has Zacks Rank #2 (Buy).
FBL Financial, which sells annuity and individual life insurance products, surpassed estimates in two of the last four quarters with an average positive surprise of 3.26%. The company carries Zacks Rank #2.
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