On Oct 21, 2014, AmTrust Financial Services, Inc. (AFSI) scaled a 52-week high of $50.00 on the back of a series of positive tidings. With about 1.24 million shares exchanging hands in the last trading session, shares closed at $49.95, gaining 9.9% for the day.
The year-to-date return from the stock was 52.3%, significantly ahead of the S&P return of 5.0%.
AmTrust Financial has been continuously expanding its presence globally through acquisitions. The company recently acquired Comp Options, a subsidiary of Blue Cross & Blue Shield, thereby strengthening its base in Florida, which is one of the major markets for workers' compensation insurance risks.
Apart from this, the company has acquired renewal rights to Tower Group International, Ltd.’s commercial lines business. At the beginning of the year, AmTrust Financial had taken over The Insco Dico Group to strengthen its presence in the domestic surety bonds market. These acquisitions will consolidate AmTrust’s market position and boost revenues as well.
AmTrust Financial issued a $150 million share repurchase program, in addition to the $150 million share repurchase program issued in Dec 2013 to support its growth initiatives. Though shares outstanding will increase, we believe that the company’s solid operational performance will mitigate the dilutive effect.
With respect to earnings performance, the property and casualty insurer delivered positive surprises in the trailing four quarters with an average beat of 26.7%. In the last reported quarter, it posted a net operating income of $1.34 per share that surpassed the Zacks Consensus Estimate by 33% and was higher than the year-ago quarter figure by 79%. The results were primarily driven by a significant improvement in the top line (through both organic and inorganic growth).
This Zacks Rank #1 (Strong Buy) stock’s earnings is pegged at $4.93 and $5.42 for 2014 and 2015, respectively. Its long-term growth is targeted at 15%.
Other Stocks to Consider
Investors interested in the same industry could consider other promising stocks like Alleghany Corp. (Y), Endurance Specialty Holdings Ltd. (ENH) and The Travelers Companies, Inc. (TRV). All of these have the same Zacks Rank as AmTrust Financial.
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