Estimates for Assurant, Inc. (AIZ - Free Report) have been revised upward over the past 30 days, reflecting analysts’ optimism on the stock. The stock has seen the Zacks Consensus Estimate for 2018 bottom line being raised 3.1% to $7.73 and 1% to $8.52.
This premier provider of specialized insurance products in North America and other selected markets overseas carries an impressive VGM Score of A. Shares of this Zacks Rank #2 (Buy) insurer have rallied 12.2% year to date against the industry’s 1.3% decrease. Back tested results have shown that stocks with an encouraging VGM Score of A or B coupled with a bullish Zacks Rank #1 (Strong Buy) and 2 are the best investment bets.
Banking on a lower effective tax rate, Warranty Group’s contributions as well as decent organic growth, the insurer’s net operating income is projected to grow between 20% and 25% over the 2017-level.
Factors that make Assurant a stock to invest in for attractive returns:
Guidance: The company expects Global Housing to witness a year-over-year improvement in its net operating income. Global Lifestyle’s net operating income is likely to increase after taking into consideration contributions from Warranty Group (including operating synergies), lower tax rate of about 22-24% and organic growth. Global Preneed is projected to experience a rise in revenues and earnings.
Focus on Housing and Lifestyle Businesses: Assurant has intensified focus on expanding its housing and lifestyle businesses. It intends to combine its e-commerce capabilities with its operations to strengthen other abilities. The company is also pursuing prudent acquisitions, complementing its strategy to focus on risk management in the housing market as well as on extension of fee-based business.
The company is deploying innovative products and services and adding new partnerships with leading brands like Comcast, Apple and KDDI in Japan to ramp up growth in Connected Living. These initiatives are expected to double the margins in Connected Living to 8% over the long term.
Effective Capital Management: Assurant boasts strong capital management, utilizing 50% of its free cash flow to repurchase shares. With the resumption of its share buyback program in July 2018, Assurant bought back nearly $34 million worth of shares through Aug 3. Its dividend yield currently stands at 2.2%.
Growth Projections: The Zacks Consensus Estimate for earnings per share in 2018 is expected to surge 94.2% on nearly 25% higher revenues. The consensus mark is projected to improve 10.2% as revenues rise 17.9%.
Growth Score: The stock carries a favorable Growth Score of B. Growth Score analyzes a company’s growth prospects. Back tested results have shown that stocks with an impressive Growth Score of A or B coupled with a bullish Zacks Rank of 1 or 2 offer better returns.
Positive Earnings Surprise History: The company flaunts a stellar earnings surprise history, exceeding the Zacks Consensus Estimate in the last seven consecutive quarters. This outperformance in turn, underlines the company’s operational efficiency. The average seven-quarter positive earnings surprise is 13.96%.
Attractive Valuation: Shares of Assurant are trading at a price to book multiple of 1.0, much lower than the industry average of 1.5. Price to book value ratio is the best multiple for valuing life insurers because of large variations in their earnings results from one quarter to the next. This ratio essentially measures a life insurer’s current market value relative to what it would be worth if it chooses to shut down. Underpriced shares with solid fundamentals are lucrative bets.
The stock carries a commendable Value Score of A. Back tested results have shown that stocks with an impressive Value Score of A or B coupled with a bullish Zacks Rank #1 or 2 are best investment bets.
Other Stocks to Consider
Investors interested in property and casualty industry can also check out a few other top-ranked stocks like Radian Group Inc. (RDN - Free Report) , MetLife, Inc. (MET - Free Report) and Cigna Corp. (CI - Free Report) .
Radian Group offers mortgage and real estate products and services in the United States. The company pulled off an average four-quarter beat of 15.61%. The stock has a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
MetLife engages in insurance, annuities, employee benefits and asset management businesses. The company came up with an average four-quarter positive surprise of 12.34%. The stock carries a Zacks Rank #2.
Cigna is one of the largest investor-owned health service organizations in the United States. The company delivered an average four-quarter earnings surprise of 15.61%. The stock holds a Zacks Rank of 2.
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