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Homeowners Choice Upped to Strong Buy

Zacks Equity Research

On May 21, Zacks Investment Research upgraded Homeowners Choice, Inc. (HCI) to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

Homeowners Choice witnessed rising earnings estimates on the back of strong first-quarter 2013 results. Moreover, this property and casualty insurer delivered positive earnings surprises in the last 4 quarters with an average beat of 40.2%.

Homeowners Choice reported first-quarter results on May 2. Non-GAAP earnings per share came in at $1.81, surpassing the Zacks Consensus Estimate of $1.09 by 66.1% and year-ago earnings of 88 cents by 105.7%.

Earnings were primarily aided by solid growth in top line and a 5.4% decrease in total expense.   

Top line improved 48.4% year over year and exceeded the Zacks Consensus Estimate by 47.6%.

Policies assumed from Citizens Property Insurance Corporation in Nov 2012 aided a substantial improvement in gross premiums written.

Loss ratio improved to 26.2% from 47.4% in the year-ago quarter.

Homeowners Choice also boasts a dividend yield of 2.68%, comparing favorably with the industry average of 2.01%.

The Zacks Consensus Estimate for 2013 increased 32.9% to $4.12 per share as 1 of 2 estimates was revised higher over the last 30 days. It also represents a year-over-year improvement of 26.3%. The Zacks Consensus Estimate for 2014 is currently pegged at $3.55.

Other Stocks to Consider

Apart from Homeowners Choice, other stocks that are outperforming in the property and casualty industry include AXIS Capital Holdings Ltd. (AXS), Platinum Underwriters Holdings Ltd. (PTP) and Montpelier Re Holdings Ltd. (MRH). All these stocks carry a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on AXS

Read the Full Research Report on MRH

Read the Full Research Report on HCI

Read the Full Research Report on PTP

Zacks Investment Research

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