On Mar 28, Zacks Investment Research downgraded Enstar Group Limited ESGR to a Zacks Rank #5 (Strong Sell).
Why the Downgrade?
Enstar Group has witnessed downward estimate revisions ever since it reported weak fourth-quarter 2014 results on Mar 2. In fact, the company delivered negative earnings surprises in two out of the last four quarters with an average negative surprise of 10.89%.
Fourth-quarter net earnings per share came at $5.62 missing the Zacks Consensus Estimate of $6.54 by 14.1%. The bottom line declined 31.7% from the year-ago figure.as higher expenses offset top line growth.
The expenses increased significantly due to the rise in acquisitions costs, salaries and benefits, and general and administrative expenses during the quarter.
Management estimates lower premiums written going forward, that will likely affect its top line as well. This is because of the divestitures of Torus Insurance Holdings Ltd and SeaBright Holdings, Inc. While Torus accounted for most of the company’s premiums written in 2014, SeaBright was the highest contributor of premiums in 2013.
Net realized and unrealized gains on investments also declined in the fourth quarter due to lower net realized and unrealized gains on the company’s private equity investments and equity portfolios.
The Zacks Consensus Estimate for 2015 decreased 15.4% to $11.00 per share over the last 30 days.
Stocks to Consider
Better-ranked players from the multiline insurance sector include Cigna Corp. CI, FBL Financial Group Inc. FFG and James River Group Holdings, Ltd. JRVR. All of these stocks hold a Zacks Rank #2 (Buy).
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
Be the first to comment