It has been about a month since the last earnings report for Amerisafe (AMSF Quick QuoteAMSF - Free Report) . Shares have lost about 3.1% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Amerisafe due for a breakout? 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 Q1 Earnings Beat, Revenues Down Y/Y

AMERISAFE reported first-quarter adjusted earnings per share (EPS) of 69 cents, which surpassed the Zacks Consensus Estimate by 4.6%. However, the bottom line dropped 16.9% year over year.

Operating revenues slid 1.3% year over year to $76 million. The top line beat the consensus mark by 1%.

Despite an earnings beat, investors may have been worried about weakness in underwriting results inducing a deterioration in the net combined ratio. An elevated operating expense level, resulting from an increase in loss and loss adjustment expenses incurred, underwriting and other operating costs and policyholder dividends, also contributed to the downside.

Q1 Performance

Net premiums earned of $68.4 million slipped 1.1% year over year in the quarter under review but outpaced the Zacks Consensus Estimate of $68 million. The metric was hurt by lower contributions from payroll audits and related premium adjustments as a result of moderated wage inflation levels.

Despite higher reinvestment rates, net investment income dipped 0.9% year over year to $7.4 million and fell short of the consensus mark of $8 million. Fee and other income dropped 37.6% year over year.

AMERISAFE reported a pre-tax underwriting profit of $8.7 million, which fell 29.2% year over year.

Total expenses escalated 5% year over year to $59.7 million in the first quarter.

Operating net income of $13.3 million decreased 17% year over year.

The net combined ratio deteriorated 510 basis points (bps) year over year to 87.3% but came lower than the consensus mark of 90.5%. The metric suffered due to a deteriorating net underwriting expense ratio and net loss ratio.

Financial Update (as of Mar 31, 2024)

AMERISAFE exited the first quarter with cash and cash equivalents of $33.4 million, which declined 13.7% from the 2023-end level.

Total assets of $1.2 billion increased 1.1% from the figure in 2023 end.

Shareholders' equity of $301.1 million grew 3% from the 2023-end level.

Book value per share was $15.74 as of Mar 31, 2024, which advanced 3% from the 2023-end figure.

Return on average equity improved 150 bps year over year to 22.8% in the quarter under review.

Dividend Update

Management announced a quarterly cash dividend of 37 cents per share, which will be paid out on Jun 21, 2024, to its shareholders of record as of Jun 14, 2024.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended downward 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. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.

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

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Amerisafe has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.