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Argo Group: A Strong Buy

Zacks Equity Research

On Dec 27, Zacks Investment Research upgraded Argo Group International Holdings, Ltd. (AGII) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?

Argo Group has witnessed rising earnings estimate on the back of solid results and concerted effort to increase shareholders’ value. The property and casualty insurer delivered positive earnings surprises in the last four quarters, with an average beat of 30.3%.

In the last reported quarter, Argo Group’s operating income of 80 cents per share substantially surpassed the Zacks Consensus Estimate by 17.6% and by 48.5%.

Bottom-line growth came on the back of company’s solid underwriting actions and also improved investments in people and technology.

Argo Group’s total revenue also increased 5.7% year over year to $364 million primarily due to higher earned premiums.

The solid underwriting actions also improved the combined ratio of Argo Group which decreased 480 basis points year over year to 97.5% during the third quarter.

Argo Group is also gaining investors’ confidence through share repurchase authorizations. Recently, the company announced a new share repurchase authorization of $150 million replacing the old authorization declared in Feb 2011. Moreover, Argo Group regularly pays quarterly dividends to its shareholders. Its current quarterly cash dividend of 15 cents a share yields at 1.28%.

The Zacks Consensus Estimate for 2013 increased 2.7% to $3.05 per share over the last 60 days as all the estimates moved north. For 2014, the same moved up by 2% to $3.52 per share over the same time frame as most of the estimates were revised higher.

Other Stock to Consider

Other top-ranked property and casualty insurers like Fidelity National Financial Inc. (FNF), Alleghany Corp. (Y) and Cincinnati Financial Corp. (CINF) are worth considering. All these stocks the same Zacks Rank as Argo Group.

Read the Full Research Report on AGII
Read the Full Research Report on CINF
Read the Full Research Report on Y
Read the Full Research Report on FNF

Zacks Investment Research