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Assurant (AIZ) Scales 52-Week High: Will the Rally Continue?

Zacks Equity Research

Shares of Assurant AIZ scaled a fresh 52-week high of $133.70 on Nov 19, eventually closing at $132.28. Impressive third-quarter earnings performance and dividend hike are likely to have contributed to this rally.

The Zacks Rank #3 (Hold) stock has gained 47.9% year to date, significantly outperforming the industry’s growth of 13.8%.

 

Let’s delve deeper and analyze the factors responsible for the stock’s upsurge.

Driving Factors

The company beat estimates in three of the last trailing quarters, the average being 20.25%. This has definitely instilled investor confidence in the stock.

Assurant delivered an impressive performance in the third quarter with the bottom line improving 59% year over year. The results benefited from earnings expansion in Global Lifestyle and lower catastrophes in Global Housing.

Total revenues increased 9.6% year over year to $2.5 billion, primarily attributable to higher premiums earned (up 8.7%) and net investment income (up 11.7%).

The board of directors recently approved a 5% hike in its quarterly dividend. The company will now pay out a quarterly dividend of 63 cents per share compared with 60 cents paid out on Sep 16, 2019. Notably, the company has consistently hiked dividend with the metric witnessing a five-year CAGR (2013-2018) of 11.8%. The recent dividend hike highlights the company’s commitment toward prudent capital management, reflecting its sustained operational performance over a period of time.

The company is likely to benefit from the performance of Global Lifestyle segment. The net earned premiums, fees and others improved 13% year over year to $1.7 billion. This uptick was primarily driven by increased contributions from Connected Living and higher trade-in volumes compared with the prior-year period.

Net operating income of $102.1 million also increased 35% year over year in this segment, driven by strong organic growth of mobile subscribers in Asia Pacific and North America, and improved operating performance in European mobile business. The company expects at least 10% average annual growth in net operating income by 2021.

Stocks to Consider

Some better-ranked stocks from the same space are Kemper Corporation KMPR, EverQuote, Inc. EVER and MGIC Investment Corporation MTG, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Kemper Corporation provides property and casualty, and life and health insurance to individuals and businesses in the United States. The company beat the Zacks Consensus Estimate in the trailing four quarters, the average beat being 16.40%.

EverQuote Incorporation offers consumers shopping for auto, home, and life insurance quotes. It serves carriers, agents, financial advisors, and indirect distributors and aggregators. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 84.25%.

MGIC Investment provides private mortgage insurance and ancillary services to lenders and government-sponsored entities in the United States. The company outpaced the Zacks Consensus Estimate in the trailing four quarters, the average beat being 12.63%.

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