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Should National Interstate (NATL) Stock Be in Your Portfolio?
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On Aug 9, Zacks Investment Research upgraded National Interstate Corporation (NATL - Free Report) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
National Interstate has been witnessing rising earnings estimates on the back of strong second-quarter 2016 results. This specialty property and casualty insurer reported earnings of 51 cents per share in the second quarter, with a positive earnings surprise of 27.50%. Earnings improved 5.9% year over year on solid underwriting results.
Revenues were up 5.3% year over year driven by a 5.2% increase in premiums earned and 10.2% rise in net investment income, both on a year-over-year basis.
National Interstate continues to boost its underwriting results and was not impacted by the development of prior-year claims reserves in the first six months of 2016. The company’s combined ratio has also improved 100 bps year over year to 96% from 97%.
The company strengthened its balance sheet through solid operational performance. While total cash and invested assets of $1.3 billion jumped 4% from the 2015-end level, debts remained flat. Debt-to-equity ratio too improved almost 20 basis points (bps) from the 2015-end level. Book value per share grew 6.5% over year-end 2015.
National Interstate’s balance sheet strength enables it to effectively deploy capital in shareholder friendly move. The insurer paid cash dividend per common share of 14 cents, up 7.7% from year-ago quarter.
Moreover, the company has entered into a merger agreement with American Financial Group, Inc. in the second quarter. Pursuant to this deal, American Financial will acquire 49% of the company’s common shares. As a result, the shareholders of National Interstate will receive $32 in cash for each share they hold as well as a special dividend of 50 cents per common share upon closure of the merger.
The Zacks Consensus Estimate for 2016 moved up 7.6% to $1.70 per share as 50% of the estimates were revised higher over the last 30 days. For 2017, 50% estimates were revised higher over the same time frame lifting the Zacks Consensus Estimate by 7.3% to $1.77 per share. Long-term earnings growth is pegged at 10.0%.
Investors interested in property casualty can look for Allied World Assurance Company Holdings, AG (AWH - Free Report) and Argo Group International Holdings, Ltd. . Each of these stocks sports a Zacks Rank #1.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7Best Stocks for the Next 30 Days. Click to get this free report >>
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Should National Interstate (NATL) Stock Be in Your Portfolio?
On Aug 9, Zacks Investment Research upgraded National Interstate Corporation (NATL - Free Report) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
National Interstate has been witnessing rising earnings estimates on the back of strong second-quarter 2016 results. This specialty property and casualty insurer reported earnings of 51 cents per share in the second quarter, with a positive earnings surprise of 27.50%. Earnings improved 5.9% year over year on solid underwriting results.
Revenues were up 5.3% year over year driven by a 5.2% increase in premiums earned and 10.2% rise in net investment income, both on a year-over-year basis.
National Interstate continues to boost its underwriting results and was not impacted by the development of prior-year claims reserves in the first six months of 2016. The company’s combined ratio has also improved 100 bps year over year to 96% from 97%.
The company strengthened its balance sheet through solid operational performance. While total cash and invested assets of $1.3 billion jumped 4% from the 2015-end level, debts remained flat. Debt-to-equity ratio too improved almost 20 basis points (bps) from the 2015-end level. Book value per share grew 6.5% over year-end 2015.
National Interstate’s balance sheet strength enables it to effectively deploy capital in shareholder friendly move. The insurer paid cash dividend per common share of 14 cents, up 7.7% from year-ago quarter.
Moreover, the company has entered into a merger agreement with American Financial Group, Inc. in the second quarter. Pursuant to this deal, American Financial will acquire 49% of the company’s common shares. As a result, the shareholders of National Interstate will receive $32 in cash for each share they hold as well as a special dividend of 50 cents per common share upon closure of the merger.
The Zacks Consensus Estimate for 2016 moved up 7.6% to $1.70 per share as 50% of the estimates were revised higher over the last 30 days. For 2017, 50% estimates were revised higher over the same time frame lifting the Zacks Consensus Estimate by 7.3% to $1.77 per share. Long-term earnings growth is pegged at 10.0%.
NATL INTERST CP Price and Consensus
NATL INTERST CP Price and Consensus | NATL INTERST CP Quote
Other Stocks That Warrant a Look
Investors interested in property casualty can look for Allied World Assurance Company Holdings, AG (AWH - Free Report) and Argo Group International Holdings, Ltd. . Each of these stocks sports a Zacks Rank #1.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7Best Stocks for the Next 30 Days. Click to get this free report >>