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Here's Why You Should Retain AMERISAFE (AMSF) Stock Now
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AMERISAFE, Inc. (AMSF - Free Report) is well-poised to grow on the back of cost-curbing efforts and a rebounding economy. Improving the net loss ratio will boost its profitability in the coming days.
AMERISAFE, with a market cap of $967.8 million, is a leading specialty provider of workers’ compensation insurance, which markets and underwrites its insurance through subsidiaries. The company focuses on providing coverage to small to mid-sized employers engaged in hazardous industries. It primarily operates in trucking, logging, construction, agriculture, maritime and other industries.
Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
Rising Estimates
The Zacks Consensus Estimate for AMERISAFE’s 2022 earnings is pegged at $2.88 per share, indicating a 2.1% year-over-year rise. It has witnessed two upward estimate revisions in the past 60 days against none in the opposite direction. The company beat earnings estimates in three of the last four quarters and missed once.
The consensus estimate for 2022 revenues is pegged at $299.2 million.
Growth Drivers
Due to its vast experienceas a provider of workers’ compensation insurance in hazardous industries, AMERISAFE fetches higher premiums. A rebounding economy, a decline in COVID-variant spikes and enhanced agent relations are likely to support its new business growth.
AMSF’s cost-curbing efforts are increasing profits. In the first three quarters of 2022, it managed to reduce underwriting and certain other operating costs by 3.4%, while salaries and benefits fell almost 1%. The company managed to reduce expenses despite strong inflation. Our estimate suggests total expenses for 2022 to decline 2.4% year over year.
We expect the 2022 net loss ratio to be 57.3%, indicating a 100-basis-point decline from the year-ago period. This will boost the company’s profitability.
The company’s strong financial flexibility, with no debt and an increasing cash balance, is impressive. At the third-quarter end, the company had cash and cash equivalents of $91 million, which rose from the 2021-end level of $70.7 million.
Its financial flexibility allows it to engage in shareholder-friendly moves. The company handsomely returns capital to investors through share repurchases and dividends. Its dividend yield of 2.5% is higher than the industry average of 2.3%.
Also, AMSF bought back shares worth $6.5 million in the third quarter of 2022. As of Sep 30, 2022, $12.8 million was left under the authorized share buyback program.
Key Concerns
There are a few factors that are impeding growth of AMSF. The company faces stiff market competition, which somewhat affects its pricing. Also, product concentration risks and weak free cash flows are concerning.
In the trailing 12-month period, free cash flows after dividends were negative $59 million. This outflow can affect its future operations. Nevertheless, we believe that a systematic and strategic plan will drive AMSF’s long-term growth.
Milwaukee, WI-based MGIC Investment is a private mortgage insurance and other products provider. The Zacks Consensus Estimate for MTG’s current-year bottom line is pegged at $2.86 per share, indicating 49.7% year-over-year growth.
Headquartered in Sao Paulo, Brazil, XP is a leading financial products and services provider. The Zacks Consensus Estimate for XP’s 2022 bottom line is pegged at $1.43 per share, indicating 23.3% year-over-year growth.
Based in San Francisco, NerdWallet is a digital platform operator connecting individuals and businesses with financial products suppliers. The Zacks Consensus Estimate for NRDS’ 2022 earnings signals a 74.4% improvement from a year ago.
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Here's Why You Should Retain AMERISAFE (AMSF) Stock Now
AMERISAFE, Inc. (AMSF - Free Report) is well-poised to grow on the back of cost-curbing efforts and a rebounding economy. Improving the net loss ratio will boost its profitability in the coming days.
AMERISAFE, with a market cap of $967.8 million, is a leading specialty provider of workers’ compensation insurance, which markets and underwrites its insurance through subsidiaries. The company focuses on providing coverage to small to mid-sized employers engaged in hazardous industries. It primarily operates in trucking, logging, construction, agriculture, maritime and other industries.
Courtesy of solid prospects, this Zacks Rank #3 (Hold) stock is worth holding on to at the moment.
Rising Estimates
The Zacks Consensus Estimate for AMERISAFE’s 2022 earnings is pegged at $2.88 per share, indicating a 2.1% year-over-year rise. It has witnessed two upward estimate revisions in the past 60 days against none in the opposite direction. The company beat earnings estimates in three of the last four quarters and missed once.
AMERISAFE, Inc. Price and EPS Surprise
AMERISAFE, Inc. price-eps-surprise | AMERISAFE, Inc. Quote
The consensus estimate for 2022 revenues is pegged at $299.2 million.
Growth Drivers
Due to its vast experienceas a provider of workers’ compensation insurance in hazardous industries, AMERISAFE fetches higher premiums. A rebounding economy, a decline in COVID-variant spikes and enhanced agent relations are likely to support its new business growth.
AMSF’s cost-curbing efforts are increasing profits. In the first three quarters of 2022, it managed to reduce underwriting and certain other operating costs by 3.4%, while salaries and benefits fell almost 1%. The company managed to reduce expenses despite strong inflation. Our estimate suggests total expenses for 2022 to decline 2.4% year over year.
We expect the 2022 net loss ratio to be 57.3%, indicating a 100-basis-point decline from the year-ago period. This will boost the company’s profitability.
The company’s strong financial flexibility, with no debt and an increasing cash balance, is impressive. At the third-quarter end, the company had cash and cash equivalents of $91 million, which rose from the 2021-end level of $70.7 million.
Its financial flexibility allows it to engage in shareholder-friendly moves. The company handsomely returns capital to investors through share repurchases and dividends. Its dividend yield of 2.5% is higher than the industry average of 2.3%.
Also, AMSF bought back shares worth $6.5 million in the third quarter of 2022. As of Sep 30, 2022, $12.8 million was left under the authorized share buyback program.
Key Concerns
There are a few factors that are impeding growth of AMSF. The company faces stiff market competition, which somewhat affects its pricing. Also, product concentration risks and weak free cash flows are concerning.
In the trailing 12-month period, free cash flows after dividends were negative $59 million. This outflow can affect its future operations. Nevertheless, we believe that a systematic and strategic plan will drive AMSF’s long-term growth.
Key Picks
Some better-ranked stocks in the broader finance space are MGIC Investment Corporation (MTG - Free Report) , XP Inc. (XP - Free Report) and NerdWallet, Inc. (NRDS - Free Report) , each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Milwaukee, WI-based MGIC Investment is a private mortgage insurance and other products provider. The Zacks Consensus Estimate for MTG’s current-year bottom line is pegged at $2.86 per share, indicating 49.7% year-over-year growth.
Headquartered in Sao Paulo, Brazil, XP is a leading financial products and services provider. The Zacks Consensus Estimate for XP’s 2022 bottom line is pegged at $1.43 per share, indicating 23.3% year-over-year growth.
Based in San Francisco, NerdWallet is a digital platform operator connecting individuals and businesses with financial products suppliers. The Zacks Consensus Estimate for NRDS’ 2022 earnings signals a 74.4% improvement from a year ago.