Why Is Amerisafe (AMSF) Up 0.9% Since Last Earnings Report?
A month has gone by since the last earnings report for Amerisafe (AMSF). Shares have added about 0.9% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Amerisafe due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
AMERISAFE Q3 Earnings Miss on Lower Premiums Earned
AMERISAFE reported third-quarter 2023 adjusted earnings per share (EPS) of 61 cents, which missed the Zacks Consensus Estimate by 4.7%. The bottom line declined 16.4% year over year.
Operating revenues deteriorated 0.1% year over year to $74.8 million. The top line missed the consensus mark by 0.2%.
The weak third-quarter earnings were caused by lower net premiums earned and higher expenses. An increased combined ratio indicates lower profitability. However, the negatives were partially offset by increased net investment income.
Q3 Performance
Net premiums earned by AMERISAFE amounted to $66.6 million, which decreased 1.7% year over year in the third quarter. The figure missed the Zacks Consensus Estimate by 0.7%.
Net investment income of $8.1 million increased 16.1% year over year due to growing yields on fixed-income and cash securities. The figure beat the consensus estimate by 4%.
Fees and other income declined 26% year over year and missed the consensus mark by 42.2%.
AMERISAFE’s pre-tax underwriting profit of $6.3 million plunged 35.9% year over year.
Total expenses increased 4.1% year over year to $60.3 million in the third quarter, attributable to higher underwriting and other operating costs and policyholder dividends.
The net combined ratio of 90.6% increased from 85.4% a year ago and was higher than our estimate of 89.5% due to an increased net underwriting expense ratio.
Financial Update (as of Sep 30, 2023)
AMERISAFE exited the third quarter with cash and cash equivalents of $59.2 million, which decreased from $61.5 million at 2022-end.
Total assets of $1,296.6 million increased from $1,269.3 million at 2022-end.
Shareholders' equity rose from $317.4 million at 2022-end to $335.9 million in the third quarter.
Book value per share tumbled 10.1% year over year to $17.51 in the third quarter.
Return on average equity decreased 20 bps year over year to 11.8% in the quarter under review.
Dividend Update
Its board of directors declared a quarterly cash dividend of 34 cents per share. The dividend will be paid out on Dec 15, 2023, to its shareholders of record as of Dec 1. It also declared a special dividend of $3.50 per share, payable on the same date as the regular dividend.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision flatlined during the past month.
VGM Scores
Currently, Amerisafe has a poor Growth Score of F, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Amerisafe has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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AMERISAFE, Inc. (AMSF) : Free Stock Analysis Report
