American Equity (AEL) Surges 10.9%: Is This an Indication of Further Gains?
American Equity Investment (AEL) shares soared 10.9% in the last trading session to close at $45.10. The move was backed by solid volume with far more shares changing hands than in a normal session. This compares to the stock's 1.5% gain over the past four weeks.
Focus on expansion into new verticals, the increasing popularity of index products in the market, solid balance sheet and effective capital deployment continue to drive AEL.
With a compelling portfolio of fixed index and fixed rate annuity products guaranteeing principal protection, competitive rates of credited interest, tax-deferred growth, guaranteed lifetime income and alternative payout options, AEL is poised to benefit from a demography where Americans aged 65 and older will represent 20% of the total population by 2030.
This leader in the development and sale of fixed index and fixed rate annuity products is expanding into middle-market credit, real estate, infrastructure debt and agricultural loans. This should fuel fixed index annuity product sales.
The execution of the AEL 2.0 strategy remains on track. AEL expects around one-third of the new business flow to convert into the return on asset business through growth in reinsured liabilities. Thus, the insurer believes its mix of fee revenues will support a higher-return business profile.
This annuity and insurance underwriter is expected to post quarterly earnings of $1.52 per share in its upcoming report, which represents a year-over-year change of +55.1%. Revenues are expected to be $559.61 million, down 5.5% from the year-ago quarter.
While earnings and revenue growth expectations are important in evaluating the potential strength in a stock, empirical research shows a strong correlation between trends in earnings estimate revisions and near-term stock price movements.
For American Equity, the consensus EPS estimate for the quarter has been revised 2.6% higher over the last 30 days to the current level. And a positive trend in earnings estimate revision usually translates into price appreciation. So, make sure to keep an eye on AEL going forward to see if this recent jump can turn into more strength down the road.
The stock currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>
American Equity is a member of the Zacks Insurance - Life Insurance industry. One other stock in the same industry, Lincoln National (LNC), finished the last trading session 2.4% higher at $24.34. LNC has returned 11.2% over the past month.
Lincoln National's consensus EPS estimate for the upcoming report has changed -0.6% over the past month to $1.84. Compared to the company's year-ago EPS, this represents a change of -17.5%. Lincoln National currently boasts a Zacks Rank of #5 (Strong Sell).
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American Equity Investment Life Holding Company (AEL) : Free Stock Analysis Report
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