We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. To learn more, click here. By continuing to use our site, you accept our use of cookies, revised Privacy Policy and Terms of Service.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Will Higher Expenses Hurt AMERISAFE's (AMSF) Q4 Earnings?
Read MoreHide Full Article
AMERISAFE, Inc. (AMSF - Free Report) is slated to report its fourth-quarter 2023 results on Feb 21, after the closing bell. The company’s earnings missed estimates in the last reported quarter.
What Do the Estimates Say?
The Zacks Consensus Estimate for fourth-quarter earnings per share (EPS) of 66 cents indicates a 21.4% decrease from the year-ago quarter’s reported earnings of 84 cents. The consensus estimate has witnessed no movement in the past week.
The Zacks Consensus Estimate for fourth-quarter revenues is pegged at around $75.2 million, suggesting an increase of 1.8% from the year-ago quarter’s reported figure.
AMERISAFE’s earnings beat estimates in three of the trailing four quarters, missing once, the average being 14%. This is depicted in the graph below.
Before we get into what to expect for the to-be-reported quarter in detail, it is worth looking at AMSF’s previous-quarter performance.
Q3 Earnings Rewind
AMERISAFE reported third-quarter 2023 adjusted EPS of 61 cents, which missed the Zacks Consensus Estimate by 4.7%. The bottom line declined 16.4% year over year. The weak third-quarter earnings were caused by lower net premiums earned and higher expenses. An increased combined ratio indicates lower profitability. However, the negatives were partially offset by increased net investment income.
The top line of AMERISAFE is expected to have benefited from stable audit premiums and improving net investment income, fees, and other income. Continued rate decreases might have been partially offset by wage inflation. However, audit premiums are expected to have added some respite. We expect audit premiums to flatten out a bit in the fourth quarter. The Zacks Consensus Estimate implies a 1.5% improvement year over year in net premiums earned in the fourth quarter.
The company expects market dynamics to remain tough as competitive pressures and declining rates hurt the results. However, given its vast experience as a provider of workers’ compensation insurance in hazardous industries and a disciplined risk selection approach, it is expected to report a favorable retention ratio and attract new business.
Net investment income is expected to gain from higher income from higher yields on fixed maturity securities and cash and cash equivalents. The Zacks Consensus Estimate implies a 6.3% increase year over year in net investment income in the fourth quarter. The Zacks Consensus Estimate for fees and other income implies growth of 50% year over year in the fourth quarter.
Nevertheless, it is probable that increased costs and expenses have impacted the profit margins in the fourth quarter, introducing uncertainty regarding the potential for surpassing earnings expectations. The Zacks Consensus Estimate for the net underwriting expense ratio implies a deterioration of 320 basis points year over year in the fourth quarter.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for AMERISAFE this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of 0.00%. The Most Accurate Estimate is currently pegged at 66 cents per share, in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Here are some companies from the broader Finance space that have already reported earnings for the December quarter: Aflac Incorporated (AFL - Free Report) , Unum Group (UNM - Free Report) and Lincoln National Corporation (LNC - Free Report) .
Aflac reported fourth-quarter 2023 adjusted earnings of $1.25 per share, missing the Zacks Consensus Estimate by 15%. Higher benefits and claims, lower adjusted net investment income and declining profit levels from the U.S. businesses affected AFL’s earnings. However, improving profit levels in the Japan segment partially offset the negatives.
Unum Group’s fourth-quarter 2023 operating net income of $1.79 per share missed the Zacks Consensus Estimate by 3.8% due to higher policy benefits, commissions, interest and debt expenses and weaker performance in Unum International and Colonial Life. The negatives were partly offset by strong operations in the Unum U.S. unit.
Lincoln National reported fourth-quarter 2023 adjusted earnings of $1.45 per share, which outpaced the Zacks Consensus Estimate by 9.9% on the back of solid contributions from the Group Protection business, a strong fixed annuity business and positive flows in the Retirement Plan Services unit. However, the upside was partly offset by changes in market risk benefits.
Image: Bigstock
Will Higher Expenses Hurt AMERISAFE's (AMSF) Q4 Earnings?
AMERISAFE, Inc. (AMSF - Free Report) is slated to report its fourth-quarter 2023 results on Feb 21, after the closing bell. The company’s earnings missed estimates in the last reported quarter.
What Do the Estimates Say?
The Zacks Consensus Estimate for fourth-quarter earnings per share (EPS) of 66 cents indicates a 21.4% decrease from the year-ago quarter’s reported earnings of 84 cents. The consensus estimate has witnessed no movement in the past week.
The Zacks Consensus Estimate for fourth-quarter revenues is pegged at around $75.2 million, suggesting an increase of 1.8% from the year-ago quarter’s reported figure.
AMERISAFE’s earnings beat estimates in three of the trailing four quarters, missing once, the average being 14%. This is depicted in the graph below.
AMERISAFE, Inc. Price and EPS Surprise
AMERISAFE, Inc. price-eps-surprise | AMERISAFE, Inc. Quote
Before we get into what to expect for the to-be-reported quarter in detail, it is worth looking at AMSF’s previous-quarter performance.
Q3 Earnings Rewind
AMERISAFE reported third-quarter 2023 adjusted EPS of 61 cents, which missed the Zacks Consensus Estimate by 4.7%. The bottom line declined 16.4% year over year. The weak third-quarter earnings were caused by lower net premiums earned and higher expenses. An increased combined ratio indicates lower profitability. However, the negatives were partially offset by increased net investment income.
Now let’s see how things have shaped up before the fourth-quarter earnings announcement.
Factors to Note
The top line of AMERISAFE is expected to have benefited from stable audit premiums and improving net investment income, fees, and other income. Continued rate decreases might have been partially offset by wage inflation. However, audit premiums are expected to have added some respite. We expect audit premiums to flatten out a bit in the fourth quarter. The Zacks Consensus Estimate implies a 1.5% improvement year over year in net premiums earned in the fourth quarter.
The company expects market dynamics to remain tough as competitive pressures and declining rates hurt the results. However, given its vast experience as a provider of workers’ compensation insurance in hazardous industries and a disciplined risk selection approach, it is expected to report a favorable retention ratio and attract new business.
Net investment income is expected to gain from higher income from higher yields on fixed maturity securities and cash and cash equivalents. The Zacks Consensus Estimate implies a 6.3% increase year over year in net investment income in the fourth quarter. The Zacks Consensus Estimate for fees and other income implies growth of 50% year over year in the fourth quarter.
Nevertheless, it is probable that increased costs and expenses have impacted the profit margins in the fourth quarter, introducing uncertainty regarding the potential for surpassing earnings expectations. The Zacks Consensus Estimate for the net underwriting expense ratio implies a deterioration of 320 basis points year over year in the fourth quarter.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for AMERISAFE this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. That is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of 0.00%. The Most Accurate Estimate is currently pegged at 66 cents per share, in line with the Zacks Consensus Estimate. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: AMERISAFE currently carries a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.
How Other Stocks Performed
Here are some companies from the broader Finance space that have already reported earnings for the December quarter: Aflac Incorporated (AFL - Free Report) , Unum Group (UNM - Free Report) and Lincoln National Corporation (LNC - Free Report) .
Aflac reported fourth-quarter 2023 adjusted earnings of $1.25 per share, missing the Zacks Consensus Estimate by 15%. Higher benefits and claims, lower adjusted net investment income and declining profit levels from the U.S. businesses affected AFL’s earnings. However, improving profit levels in the Japan segment partially offset the negatives.
Unum Group’s fourth-quarter 2023 operating net income of $1.79 per share missed the Zacks Consensus Estimate by 3.8% due to higher policy benefits, commissions, interest and debt expenses and weaker performance in Unum International and Colonial Life. The negatives were partly offset by strong operations in the Unum U.S. unit.
Lincoln National reported fourth-quarter 2023 adjusted earnings of $1.45 per share, which outpaced the Zacks Consensus Estimate by 9.9% on the back of solid contributions from the Group Protection business, a strong fixed annuity business and positive flows in the Retirement Plan Services unit. However, the upside was partly offset by changes in market risk benefits.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.