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Bear of the Day: Federated National (FNHC)

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Federated National (FNHC - Free Report) posted a solid beat in its most recent earnings report. Normally, a stock doesn't slip to the worst Zacks Rank after a beat, so let's figure out why the stock is now a Zacks Rank #5 (Strong Sell) and the Bear of the Day.

The Numbers

FNHC beat the Zacks Consensus Estimate of $0.64 by $0.04 for a 6.25% positive earnings surprise in the most recent quarter. Revenues came in ahead of expectations at $68M for a 9.8% positive revenue surprise.


Federated National Holding Company is in the business of insurance underwriting, distribution, and claims processing. Federated National Holding Company was founded in 1991 and is based in Sunrise, Florida.

Earnings History

Usually when a stock is the Bear of the Day, the earnings history is filled with misses. This is not the case for FNHC, as there are only two misses in the last seven quarters.


Here is the real reason the stock is a Zacks Rank #5 (Strong Sell) and the Bear of the Day. The Zacks Consensus Estimate has fallen steadily over the last few months. The FY16 estimate stood at $2.84 in December but fell to $2.79 in January and is now down to $2.42 in June.

Next year has seen estimates move from $3.31 in December to $2.80. That sort of move will send the Zacks Rank lower.


Zacks has developed a chart that helps investors see how earnings estimates have impacted the price of the stock over the last several years. We call this chart the price and consensus chart, and each color coded lines represents analyst estimates over a designated year. As estimates increase, the stock tends to follow. The Zacks Rank is impacted by earnings estimate increases, beats and incorporates the idea of analyst agreement and magnitude. As a Zacks Rank #5 (Strong Sell) we see that estimates are moving higher.

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Brian Bolan is a Stock Strategist for He is the Editor in charge of the Zacks Stocks Under $10, an investor service , where he recommends the stocks in the portfolio.

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