On Sep 3, 2014, Zacks Investment Research upgraded Federated National Holding Company (FNHC) to a Zacks Rank #1 (Strong Buy).
Why the Upgrade?
Federated National Holding has been witnessing rising earnings estimates on the back of strong second-quarter 2014 results. Moreover, this well-known property and casualty insurer delivered positive earnings surprises in three of the last four quarters with an average beat of 80.1%.
On Jul 29, Federated National Holding reported second-quarter net income of $1.01 per share, which beat the Zacks Consensus Estimate by 71.2% and was significantly higher than the year-ago quarter figure. The performance benefited from solid net premiums earned, increased revenues and growth in Florida homeowners' policy.
Revenues increased 100% year over year and surpassed the Zacks Consensus Estimate as well by 1.2%. The growth came on the back of increase in net premiums earned, commission income, finance revenues, direct written policy fees, net investment income, net realized investment gains and other income. Higher revenues were marginally offset by rise in expenses
The Florida homeowners' policy count also improved 82% year over year to approximately 152,600 policies.
Federated National Holding has been successfully strengthening its balance sheet. Its cash balance increased and leverage ratios witnessed improvement as well in the reported quarter. Moreover, the company’s efficient capital deployment boosts shareholders’ confidence.
Federated National Holding’s strong performance prompted upward revisions in the Zacks Consensus Estimate, which rose 2.8% to $2.19 for 2014 and 6.1% to $2.26 for 2015, over last 30 days. The expected long-term growth rate for the stock is 20%.
Other Property and Casualty Stocks to Consider
Investors interested in the same sector could also consider AmTrust Financial Services, Inc. (AFSI), Endurance Specialty Holdings Ltd. (ENH) and Navigators Group Inc. (NAVG). All of these carry the same Zacks Rank as Federated National Holding.
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