Assurant, Inc. AIZ has been in investors’ good books on the back of product innovation, addition of mobile subscribers, new partnerships, and prudent capital deployment.
The company has a favorable VGM Score of B. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.
The stock has seen its estimates for 2020 and 2021 move up nearly 4.8% and 1.2%, respectively in the past 30 days, reflecting investor optimism.
The company delivered an earnings surprise in three of the last four reported quarters with the average beat being 6%. Its earnings per share witnessed a four-year (2015-2019) CAGR of 11%.
The Zacks Consensus Estimate for 2020 and 2021 earnings per share is pegged at $9.53 and $10.78, indicating an improvement of 11.4% and 13.1%, respectively, from the year-ago reported figure.
Now let’s see what makes the stock an investors’ favorite.
Assurant is well-positioned for continued outperformance through product innovation and new capabilities. It achieved a strong track record of growth supported by the 2018 acquisition of The Warranty Group.
Assurant continues to benefit from the solid performance of its Global Lifestyle segment, which contributed 75.7% of total revenues in the first half of 2020. Connected Living and Global Automotive continues to benefit on the back of lower claims activity. Expansion of partnerships with market leaders and new entrants, additions of mobile subscribers, continued mobile growth in both new and existing programs and growth in Global Automotive are expected to boost this segment’s performance in the days ahead.
The company remains focused on ramping up the Connected Living platform, deploying innovative products and services, and striking partnerships with leading global brands and distribution channels to drive better customer experience.
Global Preneed, another segment of the company, put up an impressive performance as well. Assurant expects earnings of Global Preneed to increase in the second half of 2020 compared with the first half of the year owing to more favorable mortality trends.
Given strong second-quarter results and increased visibility for the remainder of 2020, the company raised 2020 outlook. It now expects 12%-16% growth in net operating income per share, excluding catastrophes, up from 10%-14% expected earlier. It expects double-digit earnings growth, excluding catastrophes, mainly from Connected Living, multifamily and improved profitability in specialty business.
The company delivered strong performance in multifamily housing. It benefited from continued growth as rental households grew, expanded offerings to provide end-to end solutions, and invested in digital platform to deliver superior customer experience.
Robust cash flow creates significant flexibility to drive shareholder value. On average, 100% of segment earnings are distributed to holding company. A balanced portfolio creates diversified source of cash flows. Its risk businesses generate strong cash flows, which provide capital to support growth.
Furthermore, investors should be impressed by its capital deployment strategy, which creates balance between shareholder returns and growth. The company increased its dividend at a six-year (2014-2020) CAGR of 16.6% and currently yields 2.1%. It has $403.2 million remaining under its share repurchase authorization. In 2020, the company intends to deploy capital, mainly to fund business growth, finance other investments and return capital to shareholders via share repurchases and dividends.
Return on equity (ROE), reflecting the company’s efficient utilization of its shareholders’ funds to generate earnings, has been increasing over the past several years. Its trailing twelve months ROE of 10.2% betters the industry average of 7.5%.
Assurant has an impressive Value Score of A. Back-tested results show that stocks with a Value Score of A or B when combined with a Zacks Rank #1 (Strong Buy) or 2 (Buy) offer the best opportunities in the value investing space.
Shares of this Zacks Rank #2 multi-line insurer have outperformed the industry in a year’s time. The stock has gained 0.6% against the industry’s decline of 13%. We expect higher revenues and a solid capital position to drive shares higher in the near term.
Other Stocks to Consider
Some other top-ranked stocks in the insurance industry include James River Group Holdings Ltd JRVR, Old Republic International Corporation ORI and Horace Mann Educators Corporation HMN. While James River Group Holdings sports a Zacks Rank #1, Old Republic International and Horace Mann Educators carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
James River Group provides specialty insurance and reinsurance services in the United States. It surpassed estimates in three of the last four quarters, with the average beat being 14.86%.
Old Republic engages in the insurance underwriting and related services business primarily in the United States and Canada. It surpassed estimates in each of the last four quarters, with the average earnings surprise being 36.72%.
Horace Mann Educators operates as a multiline insurance company in the United States. It underwrites and markets personal lines of property and casualty insurance. It surpassed estimates in three of the last four quarters, with the average beat being 24.77%.
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Assurant, Inc. (AIZ): Free Stock Analysis Report
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