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Amerisafe (AMSF) Up 4.6% Since Last Earnings Report: Can It Continue?

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It has been about a month since the last earnings report for Amerisafe (AMSF - Free Report) . Shares have added about 4.6% in that time frame, underperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Amerisafe due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Amerisafe’s Earnings Beat Estimates in Q2, Improve Y/Y

Amerisafe’s second-quarter 2020 earnings of $1 per share beat the Zacks Consensus Estimate by 47.1%. Moreover, the bottom line improved 11.1% year over year. The estimate beat can be attributed to lower expenses, partly offset by a decline in revenues.

Quarter in Detail

Amerisafe’s operating revenues decreased 8.8% year over year to $83 million but the top line trumped the Zacks Consensus Estimate by 3.8%. The year-over-year decline was due to lower net premiums earned and soft net investment income.

Gross premiums written dropped 7.7% year over year to $80.3 million, primarily due to weak voluntary premiums. Underwriting profit of $16.3 million improved 21.7% year over year.

In the second quarter, net investment income declined 10.3% year over year to $7.3 million due to weak investment yields on fixed-income securities.

Total expenses of $59.7 million were down 14.2% from the year-ago quarter owing to lower loss and loss adjustment expenses incurred and decreased expenses related to policyholder dividends.

Net combined ratio of 78.5% improved 540 basis points (bps) year over year.

Financial Update

The company exited the second quarter with cash and cash equivalents of $1.1 billion, down 2.3% from 2019 end.

Total assets as of Jun 30, 2020 increased 3.8% to $1.5 billion from the level at 2019 end. Shareholder equity was $462.8 million, up 7.6% from 2019-end level.

As of Jun 30, 2020, book value per share came in at $23.94, which improved 7.4% from the level at 2019 end. Operating return on average adjusted equity of 17.9% expanded 180 bps year over year.

Dividend Update

On Jul 27, Amerisafe’s board of directors announced its quarterly dividend of 27 cents per share. The dividend will be paid on Sep 25, 2020 to shareholders of record as on Sep 11.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates flatlined during the past month.

VGM Scores

At this time, Amerisafe has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Amerisafe has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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