Why Amerisafe Shares Surged
Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.
What: Shares of Amerisafe , a workman's compensation and general liability insurance underwriter for small-to-mid-sized businesses, jumped as much as 16% after announcing better-than-expected fourth-quarter earnings results, declaring a dividend, and receiving an upgrade.
So what: For the quarter, Amerisafe reported a 19% increase in net premiums earned, a 580-basis point drop in its combined ratio (meaning it was more profitable to underwrite insurance), and 53% increase in operating EPS, to $0.49. Operating EPS topped Wall Street's expectations by $0.11. Amerisafe CEO Allen Bradley continues to see plenty of opportunity in an already improving workers compensation underwriting market. In addition, Amerisafe declared its first-ever quarterly dividend of $0.08, and was upgraded to "buy" from "neutral" by SunTrust.
Now what: This is a fantastic report all the way around. Amerisafe's combined ratio -- essentially, a margin measurement for insurers -- is headed in the right direction. Shareholders are now receiving about a 1% yield annually from its newly instituted dividend, and its primary areas of growth are seeing stabilization. Amerisafe isn't exactly what I'd call cheap for an insurer, but if it keeps reporting results like these, it could indeed have further room to run.
Craving more input? Start by adding Amerisafe to your free and personalized Watchlist so you can keep up on the latest news with the company.
With so many of the big finance firms getting bad press these days, you may be inclined to stay away from the sector entirely; but that could be a huge mistake. In fact, some of the best opportunities over the next few years can be found there, including one small, under-the-radar bank. It's been called one of The Stocks Only the Smartest Investors Are Buying. You can learn about it, and more, in The Motley Fool's exclusive free report. Just click here to keep reading.
The article Why Amerisafe Shares Surged originally appeared on Fool.com.Fool contributor Sean Williams has no material interest in any companies mentioned in this article. You can follow him on CAPS under the screen name TMFUltraLong, track every pick he makes under the screen name TrackUltraLong, and check him out on Twitter, where he goes by the handle @TMFUltraLong.Try any of our Foolish newsletter services free for 30 days. We Fools don't all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
Copyright © 1995 - 2013 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.