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Hilltop Holdings Raised to Strong Buy

Zacks Equity Research

On Jun 20, 2013, Zacks Investment Research upgraded Hilltop Holdings Inc. (HTH) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Hilltop Holdings reported strong positive surprises in the last 2 quarters. On May 6, 2013, this property and casualty insurance company reported first-quarter 2013 operating earnings per share of 39 cents, outpacing the Zacks Consensus Estimate of 31 cents and the year-ago quarter figure of 1 cent. Net income stood at $32.4 million, significantly improving from $0.3 million in the year-ago quarter.

During the reported quarter, Hilltop Holdings’ total revenue was $280.5 million, spiking from both the Zacks Consensus Estimate of $273 million and the year-ago quarter’s $38.1 million.

The year-over-year upside was primarily attributable to robust growth in both interest and non-interest income primarily due to the inclusion of banking, mortgage origination and financial advisory operations through the acquisition of PlainsCapital Corp. in Nov 2012.

Moreover, despite the challenging operating environment, Hilltop Holdings’ balance sheet remains risk-free and fairly liquid. The cash flow is improving, while the company follows a regular inorganic growth strategy to boost earnings and expand the business.

Further, Hilltop Holdings holds a comfortable position as per the regulatory requirement of the Texas Department of Insurance. As of Mar 31, 2013, the company’s insurance subsidiaries had a statutory surplus in excess of the minimum amount required. Moreover, the company’s Tier 1 risk-based capital (RBC) stood well above the regulatory requirements.

The Zacks Consensus Estimate for Hilltop Holdings’ 2013 earnings per share stands at $1.39, rebounding from a loss of 13 cents in 2012.

Other Stocks to Consider

Other property and casualty insurers worth considering, with a Zacks Rank #1 (Strong Buy), are Montpelier Re Holdings Ltd. (MRH), Alleghany Corporation (Y) and United Fire Group Inc. (UFCS).

Read the Full Research Report on HTH

Read the Full Research Report on MRH

Read the Full Research Report on Y

Read the Full Research Report on UFCS

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