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Amerisafe Inc.’s (AMSF - Analyst Report) strong first-quarter performance, which included a 36% earnings surprise, helped its shares hit their 52-week high on May 10, 2012. With a steady uptrend in price, this Zacks #1 Rank (Strong Buy) insurance underwriter looks attractive.

Upbeat Earnings and Positive Revisions

On May 9, Amerisafe reported first quarter 2012 operating earnings per share of 45 cents, exceeding the Zacks Consensus Estimate of 33 cents and the year-ago earnings of 35 cents. Results benefited primarily from higher premiums and a substantial increase in underwriting profit.

The top line of $78.7 million improved 17.5% year over year, primarily attributable to higher net premiums written and net realized gains on investments, partly offset by lower fees and other income. Underwriting profit nearly doubled to $2.8 million in the first quarter.

In response to the solid quarter, all four estimates for fiscal 2012 were raised in the last 30 days, pushing the Zacks Consensus Estimate higher by 15% to $1.73. The current estimate represents an almost 41% upside over $1.23 earned in 2011.

The Zacks Consensus Estimate for 2013 advanced 17% to $2.07 as all four estimates were again revised higher.

Valuation Looks Attractive

Shares of Amerisafe currently trade at a forward P/E of 16.1x, a 33% discount to the peer group average of 24.0x. On a price-to-book basis, shares currently trade at 1.4x, a 6.7% discount to the peer group average of 1.5x.

Market Performance & Technicals

The stock has been steadily trading near its 50 and 200-day moving average since the quarterly report.

Volume is fairly strong, averaging roughly 73,563 daily. The year-to-date return is at 18.62%, compared to the Nasdaq’s return of 8.67%.

About the Company

Incorporated in 1985 and headquartered in DeRidder, Louisiana, Amerisafe is a specialty provider of workers’ compensation insurance. With about 427 employees, the company markets its products in 35 states and the District of Columbia.

With a market capitalization of $506 million, Amerisafe competes with Baldwin & Lyons Inc. (BWINB) and SeaBright Holdings Inc. (SBX).

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