Amerisafe, Inc. AMSF hits a fresh 52-week high of $80.65 on Feb 20, before closing the day at $76.26. Strong earnings performance in the fourth quarter along with dividend hike contributed to the rally.
Shares of the Zacks Rank #3 (Hold) stock has gained 20.6%, significantly outperforming the industry’s growth of 1.2%.
Let’s delve deeper into the factors responsible for the stock’s upsurge.
What’s Driving Amerisafe?
The company’s fourth-quarter 2019 earnings of $1.70 per share outpaced the Zacks Consensus Estimate by 123.7%. Also, the bottom line improved 58.9% year over year. The upside can be attributed to a decline in expenses related to loss and loss adjustment, underwriting and other operating costs, and policyholder dividends.
Concurrent with the earnings release, Amerisafe’s board of directors hiked its quarterly dividend by 8% to 27 cents per share, up from the prior dividend payout of 25 cents per share. The initiative further reflects the company’s strong liquidity position and it not only retains the existing investors’ optimism but also attracts new ones.
In the fourth quarter, net combined ratio of 59.6% improved 2140 basis points year over year.
Moreover, net investment income has acted as an important driver of the company’s net income. Amerisafe was able to perform well in the past few years, attributable to improving investment income. The metric increased 6.7% in 2019. Despite persistently low interest rates, the company’s ability to enhance its investment income on an increased investment portfolio is expected to aid its growth going forward.
Furthermore, it boasts a healthy balance sheet, with no debt, which offers ample scope for financial flexibility to fund operations, meet financial obligations and counter weather shocks or unforeseen expenses.
Stocks to Consider
Some better-ranked stocks in the insurance space are CNA Financial Corporation CNA, Brighthouse Financial, Inc. BHF and American Financial Group, Inc. AFG. While CNA Financial currently sports a Zacks Rank #1 (Strong Buy), Brighthouse Financial and American Financial carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
CNA Financial, Brighthouse Financial and American Financial surpassed earnings estimates in the last reported quarter by 6.6%, 5.13% and 0.45%.
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