On Dec 24, Zacks Investment Research upgraded AmTrust Financial Services, Inc. (AFSI - Free Report)
to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
AmTrust Financial has been witnessing rising earnings estimates on the back of strong third-quarter 2013 results and completion of the Sagicor Europe Limited acquisition. Moreover, this property and casualty insurer delivered positive earnings surprises in the last 4 quarters with an average beat of 11.7%. The long-term expected earnings growth rate for this stock is 15%.
AmTrust Financial reported third-quarter non-GAAP earnings per share of 84 cents, surpassing the Zacks Consensus Estimate by 12.2% and the year-ago earnings of 66 cents by 25.8%.
The outperformance was aided by increase in revenues coupled with decline in expenses.
Total revenue improved 58.5% year-over-year, driven by higher net earned premium and investment income.
Combined ratio improved 60 basis points to 89.6% in the third quarter of 2013.
Operating return on common equity was 21.0% comparing favorably with 18.8% in the year-ago quarter.
Book value of $17.08 as on Sep 30, 2013 increased 10.3% from 2012 end-level.
The wholly-owned subsidiaries of AmTrust Financial closed the acquisition of Sagicor Europe Limited and its wholly-owned subsidiaries (SEL), including Sagicor at Lloyd's Limited, from Sagicor Financial Corporation for £56 million.
The Zacks Consensus Estimate for 2013 inched 0.3% to $3.10 per share as most of the estimates were revised higher over the last 60 days. The current estimate is within the guidance range provided by AmTrust Financial. For 2014, 2 of 5 estimates were revised higher over the same time frame, lifting the Zacks Consensus Estimate by 0.9% to $3.54 per share.
Other Stocks to Consider
Other players in the property and casualty industry, which look attractive at current levels, include Alleghany Corporation (Y - Free Report) , Allied World Assurance Company Holdings, AG and Cincinnati Financial Corp. (CINF - Free Report) . All the stocks share the same Zacks Rank as AmTrust Financial.