AMERISAFE, Inc. (AMSF) is a company that specializes in workers’ compensation insurance for small to mid-sized employers in hazardous industries such as construction, logging, trucking, and agriculture, among others. Due to its experience, the company fetches higher premiums and expects to retain existing policyholders while luring in new ones.
Zacks Rank and Price Performance
AMSF has a market capitalization of $986.9 million and carries a Zacks Rank #2 (Buy). With its shares increasing by 5.3% in the quarter-to-date period, the company has outperformed the industry, which only went up by 0.3%.
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Return on Equity (ROE)
In the past 12 months, AMSF had an ROE of 16.9%, higher than the industry’s average of 15.2%, indicating a more efficient use of shareholders’ money.
In the past 30 days, two estimates have moved upward for the company’s 2023 earnings, currently estimated at $2.90 per share. AMSF has beaten earnings expectations in its last four quarters and is expected to grow by 1.5% to $303.8 million in revenues in 2023.
With a rebounding economy, a decline in COVID-19 cases, and stronger agent relationships, AMSF is expected to face favorable business conditions that will allow it to grow in the future. Additionally, strong audit premiums are expected to drive revenues, while net investment income is likely to further increase due to higher yields on fixed maturity securities and cash.
AMSF also enjoys impressive financial flexibility as it has no debt and has generated an operating cash flow of $13.5 million in the first quarter of this year alone, an increase of 89.2% from the prior year. This financial stability enables the company to engage in shareholder-friendly actions such as paying quarterly cash dividends of 34 cents per share.
Factors to Monitor
Despite expectations of growth, AMSF faces significant competition in the market that could potentially affect its pricing. The company’s relatively high expenses and concentration risks may also have an impact on its operations.
Other top-ranked stocks in the finance sector include Unum Group (UNM), RLI Corp. (RLI), and Reinsurance Group of America, Incorporated (RGA), each carrying a Zacks Rank #1 (Strong Buy).
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