On Dec 31, Zacks Investment Research upgraded FBL Financial Group Inc. (FFG) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
FBL Financial has witnessed rising earnings estimates on the back of solid results and a strong effort to increase shareholders’ value. This multi-line insurer delivered positive earnings surprises in all the last four quarters, with an average beat of 18.7%.
In the last reported quarter, FBL Financial’s operating income of $1.02 per share surpassed the Zacks Consensus Estimate by 17.2% and surged above the year-over-year number by 45.7%.
Bottom-line growth came on the back of solid results at Farm Bureau Life and successful execution of strategies to increase life insurance sales. Increased interest sensitive product charges and other income also played an important role in bottom-line improvement.
FBL Financial’s focus on enhancing its operating leverage through a diversified product portfolio is showing results. Moreover, the company’s creditworthiness, prudent risk management and effective capital deployment, as reflected by the recent appreciation in regular dividends and the payout of a special dividend, score well with the ratings agencies and investors.
FBL Financial is also garnering investor confidence by enhancing its shareholders’ value through greater profit distribution and share repurchase activities. FBL Financialis left with $20.3 million shares under its buyback authorization.
Moreover, FBL Financial regularly pays quarterly dividends to its shareholders. Its current quarterly cash dividend of 15 cents a share yields at 1.35%. Since Dec 2012, the company has announced twin hikes in its regular dividend and has also distributed excess capital among its shareholders as special dividend.
FBL Financial is well positioned to reap the benefits of broader industry trends. This is important because many a time a rising tide will lift all boats in an industry. This is what is taking place in the multi line insurance space, which currently has a Zacks Industry Rank of 38 out of more than 250 industries – thus ranking among the top third of all the industries in our coverage.
The Zacks Consensus Estimate for 2013 increased 3.6% to $3.78 per share over the last 60 days. The estimate translates into a year-over-year increase of 27.3%. For 2014, the estimate too moved up by 0.2% to $3.77 per share over the same time frame.
Other Stocks to Consider
Other multi line insurers also worth considering are CNO Financial Group Inc. (CNO), Kemper Corp. (MFC) and Prudential plc (PUK). All these stocks carry the same Zacks Rank as FBL Financial.