Back to top

Analyst Blog

This page is temporarily not available.  Please check later as it should be available shortly. If you have any questions, please email customer support at support@zacks.com or call 800-767-3771 ext.  9339.

On Mar 19, Zacks Investment Research upgraded Hilltop Holdings Inc. (HTH - Analyst Report) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Following a solid fourth-quarter 2012 earnings, Hilltop has been witnessing appreciation in its earnings estimates. In an effort to diversify its operations from core P&C insurance toward a profitable banking operation, this property-casualty (P&C) insurer acquired PlainsCapital Corp.– a highly lucrative $1 billion banking entity – on Nov 30. The acquisition will add significant stability and visibility to the operating leverage in the future.

On Mar 15, Hilltop reported fourth-quarter 2012 earnings of 10 cents per share, improving from the Zacks Consensus Estimate of 8 cents and year-ago period’s earnings of 9 cents a share. Earnings were primarily aided by higher revenue that escalated to $134.9 million, ahead of both the Zacks Consensus Estimate of $52.0 million as well as the year-ago quarter’s $38.2 million.

Higher interest and non-interest income led by the incorporation of PlainsCapital’s financials for Dec 2012 contributed to the upside in earnings. Further, the acquisition enhanced total assets to $7.29 billion at 2012-end from $925.4 at 2011-end. Hilltop remains well capitalized with Tier 1 leverage ratio of 13.08% and total capital ratio of 17.81% at 2012-end, all well above the regulatory requirements.

PlainsCapital is expected to be highly accretive to earnings from 2013 onward. Hilltop’s P&C insurance segment (NLASCO) and free cash of $200 million at 2012-end, should further position it to generate higher growth in the future.

Subsequently, the Zacks Consensus Estimate for 2013 increased 3.2% to $1.30 per share, over the last 7 days. For 2014, estimates improved 1.6% to $1.29 per share, over the last 7 days. No downward revisions have been witnessed for both the years. Moreover, the Most Accurate Estimate for Hilltop’s 2013 earnings stands at $1.40, resulting in a positive ESP (read: Zacks Earnings ESP: A Better Method) of 7.69%.

Other Stocks to Consider

Apart from Hilltop, other stocks that are outperforming in the insurance sector include EMC Insurance Group Inc. (EMCI - Snapshot Report), XL Group Plc (XL - Analyst Report) and Navigators Group Inc. (NAVG - Snapshot Report). All these stocks carry a Zacks Rank #1 (Strong Buy).

Please login to Zacks.com or register to post a comment.

New to Zacks?

Start Here

Zacks Investment Research

Close

Are you a new Zacks Member or a visitor to Zacks.com?

Top Zacks Features

Learn more

Start for as little as $4.50 per trade.

My Portfolio Tracker

Is it Time to Sell?

One of the most important steps you can take today is to set up your portfolio tracker on Zacks.com. Once you do, you'll be notified of major events affecting your stocks and/or funds with daily email alerts.

More Zacks Resources

Zacks Rank Home - Evaluate your stocks and use the Zacks Rank to eliminate the losers and keep the winners.

Mutual Fund Rank Home - Evaluate your funds with the Mutual Fund Rank for both your personal and retirement funds.

Stock/Mutual Fund Screening - Find better stocks and mutual funds. The ones most likely to beat the market and provide a positive return.

My Portfolio - Track your Portfolio and find out where your stocks/mutual funds stack up with the Zacks Rank.

Zacks #1 Rank Top Movers for Zacks #1 Rank Top Movers

Company Symbol Price %Chg
DIXIE GROUP DXYN 15.84 +7.90%
BOFL HOLDING BOFI 85.30 +4.97%
RAMBUS INC RMBS 12.31 +4.41%
VIPSHOP HOLD VIPS 148.73 +4.35%
NETFLIX INC NFLX 345.74 +4.32%