Why Are Prudent Investors Favoring AMERISAFE (AMSF) Shares Now?
AMERISAFE, Inc. AMSF is strategically positioned for growth, leveraging investment income, cost-cutting initiatives and a robust balance sheet. The high interest rate environment continues to support its investment income.
Outperformer & Zacks Rank
Over the past three months, shares of AMERISAFE have rallied 9.8%, outperforming the industry’s 0.5% rise. Headquartered in DeRidder, LA, AMSF is a specialty provider of workers’ compensation insurance. It focuses on providing coverage to small to mid-sized employers engaged in hazardous industries and has a market cap of $1 billion.
Due to its solid prospects, this Zacks Rank #1 (Strong Buy) stock is a compelling addition to investment portfolios at the moment.
Let’s delve deeper.
The Zacks Consensus Estimate for AMSF’s current-year earnings is pegged at $2.48 per share, which has witnessed two upward estimate revisions in the past week against none in the opposite direction. The estimate improved 7.8% during this time. AMERISAFE beat on earnings in three of the last four quarters and missed once, the average surprise being 9.8%. This depicted in the figure below.
AMERISAFE, Inc. Price and EPS Surprise
AMERISAFE, Inc. price-eps-surprise | AMERISAFE, Inc. Quote
The consensus estimate for AMERISAFE's current-year revenues stands at $306.5 million, indicating 2.5% year-over-year growth. The company's expanding net investment income, driven by elevated fixed-income reinvestment rates, is driving growth in its top line. Notably, this figure increased 7% and 15.1% year over year in 2022 and 2023, respectively. Additionally, AMERISAFE benefits from the extended duration between premium receipt and claims settlement, further supporting its revenue growth.
The implementation of cost-saving initiatives is anticipated to be a driving force for bottom-line growth. In 2022, the company reduced its expenses by 4.1% through curbing loss adjustment expenses. In 2023, it lowered loss and loss adjustment expenses by 2.7%.
AMERISAFE's robust balance sheet, highlighted by no debt and $896.5 million in investments and cash as of Dec 31, 2023, positions the company favorably for initiatives aimed at enhancing shareholder value.
Its balance sheet strength enables it to engage in shareholder-friendly actions. It bought back shares worth $2.2 million in the fourth quarter and had $10.4 million remaining in its share buyback fund. In February 2024, it increased the quarterly dividend by 8.8%, underscoring its commitment to returning value to shareholders.
A Risk
However, there is a factor that investors should keep a careful eye on.
AMERISAFE has experienced a continuous decline in net premiums earned over the past five years. If this trend persists, it could potentially impede the company's ability to enhance its top line. However, we believe that a systematic and strategic plan of action will drive growth in the long term.
Other Key Picks
Some other top-ranked stocks in the broader Finance space are Ryan Specialty Holdings, Inc. RYAN, Chubb Limited CB and Brown & Brown, Inc. BRO, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Ryan Specialty’s 2024 full-year earnings indicates a 23.9% year-over-year increase. It beat earnings estimates in two of the past four quarters and met twice, with an average surprise of 5.1%. Also, the consensus mark for RYAN’s 2024 full-year revenues suggests 18.8% year-over-year growth.
The consensus mark for Chubb’s 2024 full-year earnings is pegged at $21.23 per share, which witnessed eight upward estimates in the past month against no movement in the opposite direction. It beat earnings estimates in each of the past four quarters, with an average surprise of 23.4%. Furthermore, the consensus estimate for CB’s 2024 full-year revenues suggests 7.4% year-over-year growth.
The Zacks Consensus Estimate for Brown & Brown’s 2024 full-year earnings is pegged at $3.20 per share, which indicates 13.9% year-over-year growth. The estimate remained stable over the past week. BRO beat earnings estimates in each of the past four quarters, with an average surprise of 11.2%.
Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
Chubb Limited (CB) : Free Stock Analysis Report
AMERISAFE, Inc. (AMSF) : Free Stock Analysis Report
Brown & Brown, Inc. (BRO) : Free Stock Analysis Report
Ryan Specialty Holdings Inc. (RYAN) : Free Stock Analysis Report
