On Dec 9, AmTrust Financial Services, Inc. (AFSI) reached a new 52-week high of $56.60 per share, driven by inorganic growth. With about 1.1 million shares exchanging hands in the last trading session, the stock closed at $56.44, gaining 3.28%.
The year-to-date return from the stock came in at 72.7%, which was significantly ahead of the S&P’s return of 11.4%.
AmTrust Financial has been consistently boosting its global presence through acquisitions. The company recently acquired a wholly owned subsidiary of CorePointe Group LLC — CorePointe Insurance Company. Earlier it had 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. Additionally it acquired renewal rights to Tower Group International, Ltd.’s commercial lines business. These acquisitions play an important role in enhancing the company’s market position and boosting its revenues.
Notably, AmTrust Financial’s strong liquidity position cushions its inorganic growth initiatives.
Rating affirmations or upgrades from credit rating agencies also play an important part in retaining investors’ faith in the stock as well as in maintaining credit worthiness in the market. AmTrust Financial scores strongly in that respect. Last month, the credit rating agency A. M. Best placed under review with positive implications the property and casualty insurer’s financial strength rating of A- (Excellent) and the issuer credit ratings of “a-” to CorePointe Insurance Company. The positive ratings encouraged AmTrust Financial to add CorePointe to its kitty.
With respect to earnings performance, this Zacks Rank #1 (Strong Buy) stock delivered positive surprises in the last four quarters with an average beat of 42.7%. In the third quarter 2014, AmTrust Financial posted operating net earnings of $1.70 per share, surpassing the Zacks Consensus
Estimate by 46% and acheiving more than double the year-ago number. This was driven by a significant improvement in the top line.
Riding on the strength of successful acquisitions and impressive third quarter 2014 results, AmTrust Financial has been witnessing upward revisions in the Zacks Consensus Estimate over the last 30 days. For 2014, the Zacks Consensus Estimate moved north by 3.9% to $5.48 per share as 1 out of 3 estimates was raised while for 2015 it edged up 0.7% to $5.54 as 1 out of 4 estimates moved up. The expected long-term earnings growth is at 15.0%.
Other Stocks to Consider
Investors interested in the same sector can also consider stocks like Selective Insurance Group Inc. (SIGI), Navigators Group Inc. (NAVG) and Catlin Group Ltd. (CLNGF), all sporting a Zacks Rank #1.
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