Advertisement
Canada markets close in 4 hours 39 minutes
  • S&P/TSX

    22,190.19
    +83.11 (+0.38%)
     
  • S&P 500

    5,253.98
    +5.49 (+0.10%)
     
  • DOW

    39,749.53
    -10.55 (-0.03%)
     
  • CAD/USD

    0.7382
    +0.0010 (+0.14%)
     
  • CRUDE OIL

    82.55
    +1.20 (+1.48%)
     
  • Bitcoin CAD

    96,481.38
    +2,498.92 (+2.66%)
     
  • CMC Crypto 200

    885.54
    0.00 (0.00%)
     
  • GOLD FUTURES

    2,233.10
    +20.40 (+0.92%)
     
  • RUSSELL 2000

    2,126.87
    +12.52 (+0.59%)
     
  • 10-Yr Bond

    4.1940
    -0.0020 (-0.05%)
     
  • NASDAQ

    16,397.99
    -1.53 (-0.01%)
     
  • VOLATILITY

    13.01
    +0.23 (+1.80%)
     
  • FTSE

    7,972.85
    +40.87 (+0.52%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • CAD/EUR

    0.6833
    +0.0028 (+0.41%)
     

Amerisafe (AMSF) Down 1.3% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Amerisafe (AMSF). Shares have lost about 1.3% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Amerisafe due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

AMERISAFE’s Q3 Earnings Beat Estimates

AMERISAFE reported third-quarter 2022 earnings per share of 73 cents, which beat the Zacks Consensus Estimate of 58 cents. The figure was also higher than our estimate of 59 cents per share. However, the bottom line plunged 28.4% year over year.

ADVERTISEMENT

Operating revenues of AMERISAFE amounted to $74.9 million, up from $73.8 million a year ago. The top line outpaced the consensus mark by 3.5% and was higher than our estimate of $71.6 million.

Its better-than-expected third-quarter results were supported by higher premiums and net investment income. However, the positives were partially offset by an elevated expense level, lower fees, and other income. The market value of its bond portfolio took a hit in the quarter.

Q3 Performance

Net premiums earned of $67.8 million inched up 0.2% year over year in the third quarter. The figure was higher than the Zacks Consensus Estimate of $66.2 million and our estimate of $65.3 million.

Net investment income jumped 15.4% year over year to $7 million due to increased investment yields on fixed-income securities. The figure was higher than the Zacks Consensus Estimate of $6.2 million and our estimate of $6 million.

Fees and other income of $0.1 million fell 30.2% year over year in the quarter under review and missed the Zacks Consensus Estimate and our estimate.

AMERISAFE reported a pre-tax underwriting profit of $9.8 million in the third quarter, which dropped 49.1% year over year. In the third quarter, the market value of AMSF’s bond portfolio decreased due to interest rate hikes.

Total expenses of $57.9 million escalated 19.9% year over year, mainly due to an increase in loss and loss adjustment expenses incurred, underwriting and other operating costs. The figure was higher than our estimate of $57.6 million.

The net combined ratio during the quarter under review was 85.4% compared with 71.5% in the year-ago period. The figure was lower than the Zacks Consensus Estimate of 87.9% and our estimate of 88.2%.

Financial Update (as of Sep 30, 2022)

AMERISAFE exited the third quarter with cash and cash equivalents of $91 million, which climbed from the 2021-end level of $70.7 million.

Total assets of $1,359.5 million declined from $1,402.7 million at 2021-end.

Shareholders' equity declined from the 2021-end level of $399.3 million to $373 million.

During the nine months ended Sep 30, 2022, net cash provided by operating activities rose to $36.1 million from the prior-year comparable period’s level of $29.4 million.

Book value per share came in at $19.47, down 21.5% year over year.

Return on average equity deteriorated 410 basis points year over year to 12% in the third quarter.

Share Repurchases and Dividend Update

AMERISAFE bought back shares worth $6.5 million in the third quarter. As of Sep 30, 2022, an amount of $12.8 million was left under the authorized share buyback program.

On Oct 25, 2022, its board of directors declared a quarterly cash dividend of 31 cents per share. The dividend will be paid out on Dec 16, 2022, to its shareholders of record as of Dec 2. It also announced a special cash dividend of $4 per share, payable on Dec 16.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted 7.5% due to these changes.

VGM Scores

At this time, Amerisafe has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.

Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. Notably, Amerisafe has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

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

AMERISAFE, Inc. (AMSF) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research