Yahoo Finance Here's Why Investors Should Hold American Financial (AFG) Now
American Financial Group, Inc. AFG is well-positioned for growth, driven by new business opportunities, increased exposures and a good renewal rate environment, improved combined ratio, stronger underwriting profit and effective capital deployment.
Growth Projections
The Zacks Consensus Estimate for American Financial’s 2024 earnings per share indicates a year-over-year increase of 3.6%. The consensus estimate for revenues is pegged at $8 billion, implying a year-over-year improvement of 6.3%.
The consensus estimate for 2025 earnings per share and revenues indicates a year-over-year increase of 6.1% and 7%, respectively, from the corresponding 2024 estimates.
Zacks Rank & Price Performance
AFG currently carries a Zacks Rank #3 (Hold). Over the past year, the stock has gained 13.4% compared with the industry’s growth of 30%.
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Style Score
American Financial has a VGM Score of B. The VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
Business Tailwinds
American Financial’s Property and Casualty (P&C) Insurance segment will likely benefit from strong performance across Property & Transportation, Specialty Casualty and Specialty Financial. A combination of new business opportunities, increased exposures, a good renewal rate environment and additional crop premiums from the Crop Risk Services acquisition in the entire P&C group is expected to drive premium growth.
AFG witnessed average renewal pricing across the entire P&C Group. It intends to maintain satisfactory rates in P&C renewal pricing going forward. Average renewal pricing across the Property & Casualty Group, excluding workers' comp businesses, was up 8% for the quarter, accelerating about 1% from the previous quarter. This is the 31st consecutive quarter to report overall renewal rate increases. The company expects to achieve overall renewal rate increases in excess of prospective loss ratio trends to meet or exceed targeted returns.
The insurer’s combined ratio has been better than the industry’s average for more than two decades. The underwriting profit of the insurer is likely to increase on the back of higher profit in the workers’ compensation, excess and surplus, executive liability, mergers and acquisitions liability businesses and higher underwriting profit in the trade credit and financial institutions businesses.
American Financial has successfully increased its dividends in each of the last 18 years. The robust operating profitability at the P&C segment, stellar investment performance and effective capital management support effective shareholders return. AFG expects its operations to continue to generate significant excess capital throughout the remainder of 2024, which provides ample opportunity for additional share repurchases or special dividends over the next year.
The Zacks Consensus Estimate for AFG’s 2025 earnings has moved 0.6% north in the past 30 days. This should instill investors' confidence in the stock.
AFG has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are Arch Capital Group Ltd. ACGL, RLI Corp. RLI and NMI Holdings Inc NMIH. While Arch Capital and RLI Corp. sport a Zacks Rank #1 (Strong Buy) each, NMI Holdings carries a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Arch Capital has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 28.41%. In the past year, shares of ACGL have climbed 40.8%.
The Zacks Consensus Estimate for ACGL’s 2024 and 2025 earnings has moved 6.4% and 2.7% north, respectively, in the past 30 days.
RLI Corp. has a solid track record of beating earnings estimates in three of the trailing four quarters and missing in one, the average being 132.39%. In the past year, shares of RLI have gained 16.2%.
The Zacks Consensus Estimate for RLI’s 2024 and 2025 earnings implies year-over-year growth of 18.2% and 2.6%, respectively.
NMI Holdings has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 8.60%. In the past year, shares of NMIH have jumped 32.4%.
The Zacks Consensus Estimate for NMIH’s 2024 and 2025 earnings implies year-over-year growth of 10.4% and 7.5%, respectively.
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RLI Corp. (RLI) : Free Stock Analysis Report
American Financial Group, Inc. (AFG) : Free Stock Analysis Report
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NMI Holdings Inc (NMIH) : Free Stock Analysis Report
