Earnings estimates for Enstar Group Limited ( ESGR - Snapshot Report ) have been trending higher following last month’s third quarter report, which included a 9.4% positive earnings surprise. This provider of management consulting services posted three straight quarters of positive earnings surprises with an average beat of 45%.

Moreover, with a price-to-book (P/B) ratio of just 0.84, this Zacks # 1 Rank (Strong Buy) is a true value pick.

Strong Third Quarter

On Nov 8, Enstar Group reported third quarter earnings of $1.16 per share, which was 9.4% above the Zacks Consensus Estimate and up nearly 76% from last year.

Income generated in the quarter was $49.9 million, which increased more than four-fold from the year-ago quarter. A combination of higher consulting fees, net investment income and net realized and unrealized gains drove the income.

On Sep 6, Enstar Group entered into an agreement to buy Household Life Insurance Company and HSBC Insurance Company from Household Insurance Group Holding Company, an affiliate of HSBC Holdings plc (HSBC). It will acquire the assets for $181 million in cash.

Moreover, at the end of last month, shareholders of SeaBright Holdings Inc. (SBX) approved the merger with Enstar Group.

Positive Earnings Estimate Revisions

The Zacks Consensus Estimate for 2012 increased 7.3% to $11.83 in the past 60 days, suggesting a year-over-year increase of approximately 16.4%. For 2013, the Zacks Consensus Estimate advanced by 4.8% to $13.20 over the same time frame, implying a year-over-year increase of 11.5%.

Attractive Valuation

Along with a very attractive P/B multiple, Enstar Group has a price-to-earnings (P/E) ratio as low as 8.9 (a P/B ratio under 3.0 and P/E ratio below 15.0 indicate value).

Moreover, the company has a 1-year return on equity (ROE) of 9.7%, higher than its peer group average of 6.5%.

Headquartered in Hamilton, Bermuda, and founded in 2001, Enstar Group engages in acquiring and managing insurance and reinsurance companies in run-off and portfolios of insurance and reinsurance business in run-off. It also provides management, consultancy and other services to the insurance and reinsurance industry. With a market capitalization of $1.74 billion and operations in the United Kingdom, the United States, Europe, Australia and Bermuda , the company competes with Berkshire Hathaway Inc. (BRK.A) and Leucadia National Corp. (LUK), among others.

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