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American Financial Hits 52-Week High on Solid Q3 Earnings

Zacks Equity Research

On Nov 10, American Financial Group Inc. (AFG) touched a 52-week high of $61.00. The rise in the stock was propelled by strong third-quarter earnings which outpaced the Zacks Consensus Estimate by 20.7%. About 223,249 shares exchanged hands in the last session.

Growth Drivers

American Financial’s strong third-quarter financial performance was a continuation of superior results and attractive revenue and earnings growth.

The company’s operating income of $1.40 per share surpassed the Zacks Consensus Estimate of $1.16 and improved 32% year over year.

Investors are optimistic on the stock given that American Financial delivered a positive surprise in each of the last four quarters, with an average beat of 9.9%.

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Along with the bottom line, American Financial's top line growth of 9.6% year over year to $1.58 billion also cheered investors. Moreover, total revenue surpassed the Zacks Consensus Estimate of $1.09 billion. Higher premiums earned as well as an increase in net investment income drove the upside.

Book value per share, which is a measure of company’s net worth also grew 7.1% year over year to $48.59.

Operating profitability, as measured by net operating earnings margin, also improved 230 basis points year over year to 12.3%.

Investors’ confidence in the stock also stems from the company’s earnings outlook. For 2014, earnings are projected in the range of $4.50 to $4.90 per share, the mid-point of $4.70 comparing favorably with $4.22 reported in 2013.

Also, American Financial's intelligent capital management featured by regular share repurchases and dividend increase makes the stock a favorite among investors.

American Financial carries a Zacks Rank #3 (Hold).

Stocks to Consider

Better-ranked players in the industry include AmTrust Financial Services, Inc. (AFSI), Arch Capital Group Ltd. (ACGL) and HCI Group, Inc. (HCI). All these stocks sport a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on AFG
Read the Full Research Report on AFSI
Read the Full Research Report on ACGL
Read the Full Research Report on HCI


Zacks Investment Research