Assurant inc. (NYSE:AIZ) has been witnessing downward revisions lately. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised substantially 44.9% downward. For 2018, the consensus mark moved 2.4% south.
Shares of Assurant have also underperformed the industry so far this year. The stock has gained 9.5%, lagging the industry’s growth of 10.3% during the period.
The stock carries a Zacks Rank #5 (Strong Sell) with an unimpressive Growth Score of D. Back-tested results show that stocks with a Growth Score of A or B when combined with a bullish Zacks Rank #1 (Strong Buy) or 2 (Buy), comfortably outperform other stocks.
Assurant has been witnessing lower net earned premiums and other considerations over the last few years and the first three quarters of 2017 were no exception. Each quarter experienced a year-over-year decline in the same. This continues to further weigh on total revenues that have been decreasing for a while now. Assurant’s In-force policies have also been trending downward over the last several years.
The Zacks Consensus Estimate for both the top and bottom-line in 2017 represent a year-over-year decline of 17.3% and 8.8%, respectively.
Though the third quarter was rampaged by a series of cat events, the fourth has till date only suffered the brunt of California wildfires. Assurant estimates fourth-quarter pre-tax reportable catastrophe loss from the same between $6 million and $8 million. The company incurred a huge cat loss in the previous quarter, wherein Global Housing segment was affected the most.
The above segment is estimated to be weighed on by lower mortgage originations, decrease in real estate-owned volumes and declining placement rates. Total revenues have declined nearly 19% over the last couple of years.
For 2017, the company expects Global Housing’s net earned premiums and net operating income to decrease due to the ongoing normalization of lender-placed insurance business, which represents lower placement rates for the second half of 2017 plus lower contributions from mortgage solutions.
Assurant’s cash flow from operations has also been on the wane over the last few years.
Return on equity (ROE) undermines a company’s growth potential. Assurant’s trailing 12-month ROE of 3.6% compares unfavorably with the ROE of 7% for the industry, reflecting that it is inefficient in using shareholder funds.
Choosing the Stocks
While Assurant doesn’t appear to be an attractive pick right now, there are a few other solid stocks in the insurance space that promise greater returns. Also, these companies have outperformed the industry’s rally so far this year.
We have boiled down to three favorable stocks with potential to enhance one’s portfolio with the help of the Zacks Stock Screener. Our search is refined by using the solid Zacks Rank, northbound estimate revisions, Value Score of A or B and growth projections. Value Score of A or B coupled with Buy-rated stocks are the best deals to offer.
Headquartered in Newark, NJ, Prudential Financial Inc. (NYSE:PRU) offers an array of financial products and services including life insurance, annuities, retirement-related services, mutual funds, investment management and real estate services. The company has a Zacks Rank #2 with a Value Score of A. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 2.6% upward and for 2018, moved 0.7% north, over the last 30 days. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for 2017 and 2018 reflects a year-over-year improvement of 13.7% and 8.9%, respectively.
Shares of Prudential (LON:PRU) have gained 11.4% year to date, outperforming the industry as well as Assurant.
Headquartered in Philadelphia, PA, Radian Group Inc. (NYSE:RDN) is a credit enhancement company, which supports homebuyers, mortgage lenders, loan servicers and investors with a suite of private mortgage insurance and related risk-management products and services. The company carries a Zacks Rank of 2 with a Value Score of B. The stock has been witnessing upward estimate revisions — up 1.7% for 2017 and 1.4% for 2018 — over the last 30 days.
The Zacks Consensus Estimate for 2017 and 2018 reflects a year-over-year rise of 12.8% and 9.7%, respectively.
Shares of Radian have gained 17.3% year to date, outpacing the industry it belongs to as well as Assurant.
Headquartered in Worcester, MA, The Hanover Insurance Group, Inc. (NYSE:THG) provides various property and casualty insurance products and services in the United States and internationally. The company is Zacks #1 Ranked with a Value Score of B. The stock has seen the Zacks Consensus Estimate for current-year earnings being revised 12.6% upward and for 2018, moved 2.1% north over the last 30 days.
The Zacks Consensus Estimate for 2017 and 2018 reflects a year-over-year increase of 12.6% and 2.1%, respectively.
Shares of The Hanover Insurance have gained 18.7% year to date, outperforming its industry as well as Assurant.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>
Add a Comment
Are you sure you want to block %USER_NAME%?
By doing so, you and %USER_NAME% will not be able to see any of each other's Investing.com's posts.
%USER_NAME% was successfully added to your Block List
Since you’ve just unblocked this person, you must wait 48 hours before renewing the block.