Yahoo Finance Why Investors Should Invest in Assurant (AIZ) Stock Now
Assurant, Inc. AIZ is well-poised for growth, driven by increased mobile subscribers in North America, inorganic and organic growth strategies, higher average insured values, and effective capital deployment.
Return on Equity (ROE)
ROE, a measure reflecting how efficiently a company utilizes shareholders’ money, was 13.5% in the trailing 12 months, better than the industry’saverage of 9.8%.
Zacks Rank & Price Performance
AIZ currently sports a Zacks Rank #1 (Strong Buy). Its shares have gained 2% in the year-to-date period against the industry’s decline of 14.1%.
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Optimistic Growth Projections
The Zacks Consensus Estimate for AIZ’s 2023 earnings is pegged at $13.91 per share, indicating an 11.1% increase from the year-ago reported figure of $11.13. The same for AIZ’s 2023 revenues is pegged at $10.7 billion, indicating a 2.7% increase from the year-ago reported figure of $10.4 billion.
The company beat earnings estimates in three of the past four quarters and missed once, the average surprise being 18.2%.
Key Drivers
Net earned premiums contributed 84.5% to the total revenues in the first quarter of 2023. Continued organic growth across distribution channels, extended service contracts and mobile subscribers should fuel growth of this metric in the future.
Revenues from the Global Lifestyle segment comprising of Connected Living and Global Automotive business, increased 2.6% in the first quarter. AIZ’s U.S. Connected Living business will continue to drive growth in this segment.
The International business is also expected to stabilize as the company is taking steps to grow its footprint through expansion and expense handling. The Global Automotive business is expected to show steady progress as the company materializes benefits from its partnership with CNH Industrial. Increasing the number of partnerships outside the United States will further boost its results. Adjusted EBITDA is expected to show modest growth for 2023.
The Global Housing segment will benefit from higher policy growth from new and existing clients. As inflation continues to improve, the segment’s bottom line should improve in the future. Ongoing expense actions should lead to improved performance, going forward. Adjusted EBITDA is expected to grow, driven by improved performance in Homeowners reflecting higher lender-placed net earned premiums.
Net investment income is expected to gain from higher income from higher yields on fixed maturity securities, and cash and cash equivalents, and increased income from commercial mortgage loans on real estate due to a rise in invested assets.
Assurant has a strong capital management policy. Its solid capital position supports effective capital deployment. At present, $274 million remains unused under the repurchase authorization. It did not repurchase any shares in the first quarter but aims to resume soon. The company paid out dividends worth $37 million in the first quarter of 2023.
A Risk to Keep an Eye on
The multi-line insurer has been experiencing an increase in operating expenses, driven by higher policyholder benefits, and underwriting, selling, general and administrative expenses. Such expenses continue to weigh on the margin expansion. Nevertheless, 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 from the Multi-line insurance space are Old Republic International Corporation ORI, Radian Group Inc. RDN, and American International Group, Inc. AIG. Old Republic International currently sports a Zacks Rank #1, while Radian Group and American International presently carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The bottom line of Old Republic International outpaced the Zacks Consensus Estimate in each of the trailing four quarters, the average surprise being 29.9%. The consensus mark for ORI’s 2023 earnings has moved 9.1% north in the past 30 days.
Radian Group’s bottom line outpaced estimates in each of the trailing four quarters, and the average earnings surprise is 38.7%. The consensus mark for RDN’s 2023 earnings has moved 6.5% north in the past 30 days.
American International’s bottom line outpaced estimates in three of the trailing four quarters and missed once, and the average earnings surprise is 9.2%. The Zacks Consensus Estimate for AIG’s 2023 earnings indicates a 43.7% rise from the prior-year reported figures.
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