Shares of The Hartford Financial Services Group, Inc. (HIG - Free Report) scaled a fresh 52-week high of $61.74 on Nov 11, before closing the day at $61.35. Impressive earnings performance in the third quarter and strategic initiatives contributed to this rally.
Over the past year, shares of this Zacks Rank #3 (Hold) company have surged 35.3%, significantly outperforming the industry’s growth of 8.2%.
Let’s delve deeper and analyze the factors responsible for the stock’s upsurge.
Hartford Financial performed impressively in the third quarter with adjusted operating earnings of $1.50 per share beating the Zacks Consensus Estimate by 19% on higher revenues and its solid Commercial Lines business. The bottom line also shot up 30.4% year over year.
Investors were impressed by the company’s ability to continue delivering a robust top line on the back of its Commercial Lines Business. Net income of the segment also rose 16% year over year owing to improved new investment income, increased net realized capital gains and a better underwriting gain.
The company continues to focus on improving its risk-profile through a number of well-executed strategic dispositions of its legacy run-off businesses. Hartford Financial has been vending non-core businesses to concentrate on its U.S. operations and enhance its operating leverage. Apart from lowering expenses, boosting profitability and bumping up returns to shareholders, these divestitures are strengthening financial flexibility by freeing up more capital.
Additionally, Hartford Financial’s net investment income has been growing over the last few quarters, which in turn, is encouraging.
The company has been successfully reducing its debt load over the past several years (except 2017) and this is an attractive proposition for investors. Hartford Financial’s capital appreciations, repayment of government funds and measures to de-risk its balance sheet fortified its financial strength. It also has an intelligent capital management strategy in place, featuring share buybacks and dividend hikes.
Stocks to Consider
Investors looking for some better-ranked stocks might consider Radian Group Inc. (RDN - Free Report) , MGIC Investment Corporation (MTG - Free Report) and Kemper Corporation (KMPR - Free Report) , each carrying a Zacks Rank #2 (Buy).
Radian Group is engaged in the mortgage and real estate services business. The company came up with a positive surprise in all the last four quarters, the average being 10.05%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
MGIC Investment provides private mortgage insurance, other mortgage credit risk management solutions and ancillary services to lenders and government sponsored entities. It delivered a positive surprise of 12.63% over the preceding four quarters.
Kemper Corporation provides property and casualty, and life and health insurance. The stock’s average four-quarter beat is 16.4%.
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