American Financial Group, Inc. (AFG - Free Report) remains poised for growth, riding on an impressive profile into that direction, consistent price increase in property and casualty business, plus effective capital deployment. The Zacks Rank #3 (Hold) insurer looks promising, banking on a number of growth drivers.
Positive Growth Projections: The Zacks Consensus Estimate for earnings per share is $6.80 on revenues of $987.2 million for 2017, reflecting a year-over-year increase 12.77%. For 2018, the Zacks Consensus Estimate for earnings per share is pegged at $6.75, though reflecting a slight slip of 0.74%.
American Financial has long-term expected earnings per share growth of 6.30%.
Northbound Estimates: The Zacks Consensus Estimate for 2017 has moved up 4.8% in the last 30 days, while the same for 2018 has inched up 1.5% over the same time frame.
An Outperformer: American Financial’s shares have rallied 15.37% year to date, outperforming the industry’s increase of 8.84%. The shares have also outperformed the S&P 500, increasing 8.48% over the same time frame.
Positive Earnings Surprise History: American Financial has surpassed the Zacks Consensus Estimate in the last three quarters. The company’s average four-quarter surprise is 17.03%.
Growth Drivers in Place
American Financial maintains a solid operational performance and estimates Specialty P&C net premiums written to grow 3-7% in 2017. Specialty casualty group will generate net written premium growth of 7-11%, up from the prior guidance of 5-9%. Net written premiums in specialty financial group are projected in the range of flat to 4% increase.
The company also expects a price rise in its property and casualty business between flat to 1% increase.
American Financial has always maintained a combined ratio that compares favorably with industry average. The company now estimates a combined ratio between 92% and 94% in 2017. The property and transportation group is estimated to deliver combined ratio between 91% and 95%, while specialty casualty group is projected to report combined ratio between 94% and 96%. The combined ratio for the specialty financial group is projected in the range of 84-88%.
American Financial enjoys a strong capital position (excess capital was approximately $1.1 billion on Jun 30, 2017) with moderate adjusted financial leverage around 20% along with good cash flow and an interest coverage ratio. This has helped the insurer announce a special dividend of $1.50 per share in the last quarter. The company also has 4.1 million shares remaining under its authorization as of Aug 1, 2017. American Financial expects to hold back about $200-$300 million of the excess capital to maintain flexibility.
Stocks to Consider
Some better-ranked stocks from the same industry are Atlas Financial Holdings, Inc. , Markel Corporation (MKL - Free Report) and Mercury General Corporation (MCY - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Atlas Financial underwrites commercial automobile insurance policies in the United States. The company delivered a four-quarter average positive surprise of 57.94%.
Markel markets and underwrites specialty insurance products in the United States and internationally. The company delivered positive surprises in all the last four quarters with the average beat being 21.06%.
Mercury General writes personal automobile insurance in the United States. The company delivered positive surprises in all the trailing four quarters with an average beat of 1.06%.
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It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
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American Financial Group, Inc. (AFG - Free Report) remains poised for growth, riding on an impressive profile into that direction, consistent price increase in property and casualty business, plus effective capital deployment. The Zacks Rank #3 (Hold) insurer looks promising, banking on a number of growth drivers.
Positive Growth Projections: The Zacks Consensus Estimate for earnings per share is $6.80 on revenues of $987.2 million for 2017, reflecting a year-over-year increase 12.77%. For 2018, the Zacks Consensus Estimate for earnings per share is pegged at $6.75, though reflecting a slight slip of 0.74%.
American Financial has long-term expected earnings per share growth of 6.30%.
Northbound Estimates: The Zacks Consensus Estimate for 2017 has moved up 4.8% in the last 30 days, while the same for 2018 has inched up 1.5% over the same time frame.
An Outperformer: American Financial’s shares have rallied 15.37% year to date, outperforming the industry’s increase of 8.84%. The shares have also outperformed the S&P 500, increasing 8.48% over the same time frame.
Positive Earnings Surprise History: American Financial has surpassed the Zacks Consensus Estimate in the last three quarters. The company’s average four-quarter surprise is 17.03%.
Growth Drivers in Place
American Financial maintains a solid operational performance and estimates Specialty P&C net premiums written to grow 3-7% in 2017. Specialty casualty group will generate net written premium growth of 7-11%, up from the prior guidance of 5-9%. Net written premiums in specialty financial group are projected in the range of flat to 4% increase.
The company also expects a price rise in its property and casualty business between flat to 1% increase.
American Financial has always maintained a combined ratio that compares favorably with industry average. The company now estimates a combined ratio between 92% and 94% in 2017. The property and transportation group is estimated to deliver combined ratio between 91% and 95%, while specialty casualty group is projected to report combined ratio between 94% and 96%. The combined ratio for the specialty financial group is projected in the range of 84-88%.
American Financial enjoys a strong capital position (excess capital was approximately $1.1 billion on Jun 30, 2017) with moderate adjusted financial leverage around 20% along with good cash flow and an interest coverage ratio. This has helped the insurer announce a special dividend of $1.50 per share in the last quarter. The company also has 4.1 million shares remaining under its authorization as of Aug 1, 2017. American Financial expects to hold back about $200-$300 million of the excess capital to maintain flexibility.
Stocks to Consider
Some better-ranked stocks from the same industry are Atlas Financial Holdings, Inc. , Markel Corporation (MKL - Free Report) and Mercury General Corporation (MCY - Free Report) , each flaunting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Atlas Financial underwrites commercial automobile insurance policies in the United States. The company delivered a four-quarter average positive surprise of 57.94%.
Markel markets and underwrites specialty insurance products in the United States and internationally. The company delivered positive surprises in all the last four quarters with the average beat being 21.06%.
Mercury General writes personal automobile insurance in the United States. The company delivered positive surprises in all the trailing four quarters with an average beat of 1.06%.
More Stock News: This Is Bigger than the iPhone!
It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.
Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020. Click here for the 6 trades >>
Zacks Names "Single Best Pick to Double"
From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.
It’s a little-known chemical company that’s up 65% over last year, yet still dirt cheap. With unrelenting demand, soaring 2022 earnings estimates, and $1.5 billion for repurchasing shares, retail investors could jump in at any time.
This company could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in little more than 9 months and NVIDIA which boomed +175.9% in one year.
Free: See Our Top Stock and 4 Runners Up >>
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