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Why Should You Hold ProAssurance (PRA) in Your Portfolio?

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Zacks Equity Research
·3 min read
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ProAssurance Corporation PRA has been raising investor optimism on the back of its core business, strategic initiatives and financial strength.
Given the company’s strong fundamentals, it is well-placed for long-term growth.

Here we discuss the reasons for keeping this currently Zacks Rank #3 (Hold) company in your investment portfolio. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Its core business has been witnessing improvement over the past few years owing to its strategic measures. Although the company suffered to some extent in the first nine months of 2020, we expect that the addition of profitable businesses to expand its key business lines will drive growth going forward.

ProAssurance has been witnessing growth on the back of successful acquisitions and integrations of companies. Its financial strength helped it in this regard. The acquisitions of American Physicians Service Group, Medmarc, Eastern Insurance Holdings significantly strengthened its position in the workers’ compensation market. The company is on course to acquire NORCAL (expected to close by the first quarter of next year). With further penetration, we expect it to generate more profitable business.

The company’s balance sheet position also impresses. It has been enjoying significant cash flow from operating activities over the last few quarters, banking on its solid finances. As of Sep 30, 2020, it had cash and cash equivalents of $231.9 million and a revolving credit facility of up to $250 million (set to expire in November 2024), higher than its long-term debt obligation of $285 million. The company’s total debt to total capital of 17.7% is lower than the industry's average of 20.6%.

However, we are concerned about its high expenses, which are likely to put pressure on its margins going forward.

Price Performance

Shares of this property and casualty (P&C) insurer have surged 32.1% in the past six months against the industry’s decline of 19.1%.

Some better-ranked stocks in the insurance space are Fidelity National Financial, Inc. FNF, American Financial Group, Inc. AFG and First American Financial Corporation FAF, each holding a Zacks Rank #2 (Buy), presently. Fidelity National, American Financial and First American Financial have gained 18.7%, 37.5% and 3% in the same time frame.

Zacks Names “Single Best Pick to Double”

From thousands of stocks, 5 Zacks experts each have chosen their favorite to skyrocket +100% or more in months to come. From those 5, Director of Research Sheraz Mian hand-picks one to have the most explosive upside of all.

You know this company from its past glory days, but few would expect that it’s poised for a monster turnaround. Fresh from a successful repositioning and flush with A-list celeb endorsements, it could rival or surpass other recent Zacks’ Stocks Set to Double like Boston Beer Company which shot up +143.0% in a little more than 9 months and Nvidia which boomed +175.9% in one year.

Free: See Our Top Stock and 4 Runners Up >>

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ProAssurance Corporation (PRA) : Free Stock Analysis Report
First American Financial Corporation (FAF) : Free Stock Analysis Report
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American Financial Group, Inc. (AFG) : Free Stock Analysis Report
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Zacks Investment Research