Here's Why AMERISAFE (AMSF) is Attracting Prudent Investors 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 5.2%, outperforming the industry’s 4.6% 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 $938.4 million.
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 60 days against none in the opposite direction. The consensus 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 is 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 rising net investment income, due to elevated fixed-income reinvestment rates, is driving its top-line growth. 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.
The company’s 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, the company increased its quarterly dividend by 8.8%, underscoring its commitment to returning value to shareholders.
However, AMERISAFE has experienced a continuous decline in net premiums earned over the past five years. If this trend persists, it could potentially harm 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 Stocks to Consider
Some other top-ranked stocks in the broader Finance space are Horace Mann Educators Corporation HMN, Palomar Holdings, Inc. PLMR and HCI Group, Inc. HCI, each currently sporting a Zacks Rank of 1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Horace Mann’s earnings surpassed estimates in three of the last four quarters and matched the mark once, the average surprise being 15.2%. The Zacks Consensus Estimate for HMN’s 2024 earnings is pegged at $3.15 per share, which has more than doubled from the prior-year reported figure. The consensus mark for revenues indicates a rise of 9.2% from the year-ago actual. The consensus mark for HMN's 2024 earnings has moved 5% north in the past 60 days.
Palomar’s earnings beat estimates in each of the trailing four quarters, the average surprise being 11.1%. The Zacks Consensus Estimate for PLMR’s 2024 earnings indicates an improvement of 16.3% from the prior-year actual. The consensus estimate for revenues suggests an improvement of 24.6% from the year-ago actual. The consensus mark for PLMR’s 2024 earnings has moved 1.7% north in the past 30 days.
The bottom line of HCI Group outpaced estimates in each of the trailing four quarters, the average surprise being 522.5%. The Zacks Consensus Estimate for HCI’s 2024 earnings indicates an improvement of 37.9% from the prior year's actual. The same for revenues suggests an improvement of 44.7% from the year-ago actual. The consensus mark for HCI’s 2024 earnings has moved 37.4% north in the past 30 days.
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AMERISAFE, Inc. (AMSF) : Free Stock Analysis Report
HCI Group, Inc. (HCI) : Free Stock Analysis Report
Horace Mann Educators Corporation (HMN) : Free Stock Analysis Report
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