It has been about a month since the last earnings report for Amerisafe (AMSF - Free Report) . Shares have lost about 0.5% 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 its most recent earnings report in order to get a better handle on the important catalysts.
Amerisafe Q2 Earnings Top Estimates
Amerisafe reported second-quarter 2018 operating earnings per share of 92 cents, which exceeded the Zacks Consensus Estimate by 26%. The bottom line was also increased 12.2% year over year.
Better-than-expected earnings were driven by an increase in premium income, partly offset by a rise in total expenses and lower net investment income.
Quarter in Detail
Amerisafe’s total operating revenues increased 6.8% from the prior-year quarter to $96.4 million and surpassed the Zacks Consensus Estimate by 3.5%.
Net premium earned totaled $89 million, up 7.5% year over year.
Net investment income decreased 2.2% year over year to $7.3 million. The decline can be primarily attributed to an increase in the value of an investment in a limited partnership hedge fund in the year-ago quarter.
Total expenses came in at $74.5 million, up 9.9% from the year-ago quarter.
The uptick was driven by increased loss and loss adjustments incurred, and underwriting and other operating costs.
Net combined ratio, a measure of profitability (lower the better), was 83.6% compared with 1.9% in the year-ago quarter.
Amerisafe exited the quarter with cash and cash equivalents of $21.2 million, down 62% year over year.
As of Jun 30, 2018, total shareholders’ equity was $445.4 million, up 4.7% from Dec 31, 2017.
Operating return on equity was 16.1%, up 280 bps year over year.
Book value per share as of Jun 30, 2018 was $23.11, down 7.6% year over year.
Dividend and Share Repurchase Update
On Jul 31, the company declared its quarterly dividend of 22 cents per share. This dividend is payable Sep 21, to its shareholders of record as of Sep 7.
During the quarter, no shares were repurchased under the company’s share repurchase plan.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates.
Currently, Amerisafe has a subpar Growth Score of D, however its Momentum Score is doing a bit better with a C. Following the exact same course, 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 D. If you aren't focused on one strategy, this score is the one you should be interested in.
Zacks style scores indicate that the company's stock is suitable for value and momentum investors.
Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Interestingly, Amerisafe has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.