Amerisafe (AMSF) Down 7.1% Since Last Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for Amerisafe (AMSF). Shares have lost about 7.1% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Amerisafe due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
AMERISAFE’s Q4 Earnings Beat, Hikes Dividend by 10%
AMERISAFE reported fourth-quarter 2022 adjusted earnings of 84 cents per share, which outpaced the Zacks Consensus Estimate by 29.2% and our estimate of 62 cents per share. It broke even in the prior-year quarter.
Operating revenues remained flat year over year at $74 million. The top line beat the consensus mark by a whisker and was higher than our estimate of $72.1 million.
The quarterly results gained momentum on the back of a significant increase in net investment income, solid underwriting results and a declining expense level. However, the positives were partially offset by reduced premiums.
Q4 Performance
Net premiums earned by AMERISAFE amounted to $66.1 million, which slipped 2.5% year over year in the fourth quarter. The figure fell short of the Zacks Consensus Estimate of $67 million but came higher than our estimate of $65.8 million.
Net investment income of $7.6 million advanced 25.8% year over year on the back of growing yields on fixed-income securities. The figure beat the consensus mark of $6.6 million and our estimate of $6.2 million.
Fees and other income climbed 43.2% year over year to $0.1 million in the quarter under review and matched the Zacks Consensus Estimate as well as our estimate.
AMERISAFE reported a pre-tax underwriting profit of $11.9 million. An underwriting loss of $8.7 million was reported in the prior-year quarter.
Total expenses declined 29.2% year over year to $54.1 million in the fourth quarter, attributable to lower loss and loss adjustment expenses incurred coupled with reduced policyholder dividend costs. The reported figure also fell shy our estimate of $57.7 million.
The net combined ratio of 82% improved 3,090 basis points (bps) year over year. The figure was lower than the consensus mark of 87% and our estimate of 87.7%.
Financial Update (as of Dec 31, 2022)
AMERISAFE exited the fourth quarter with cash and cash equivalents of $61.5 million, which decreased 13.1% from the 2021-end level.
Total assets of $1,269.3 million tumbled 9.5% from the figure in 2021 end.
Shareholders' equity fell 20.5% from the 2021-end level to $317.4 million.
Book value per share tumbled 19.6% year over year to $16.57 in the fourth quarter.
Return on average equity improved 2,090 bps year over year to 24.1% in the quarter under review.
Dividend Hike Announced
Concurrent with announcing quarterly results, management sanctioned a 9.7% hike in the quarterly dividend. The increased dividend amounting to 34 cents per share will be paid out on Mar 24, 2023, to its shareholders of record as of Mar 10, 2023.
Full-Year Update
AMERISAFE’s adjusted earnings of $3.07 per share improved 8.9% year over year in 2022.
Net premiums earned dipped 1.6% year over year to $271.7 million. Net investment income of $27.2 million rose 7% year over year.
AMERISAFE reported a pre-tax underwriting profit of $44.7 million in 2022, which advanced 13.2% from the 2021 figure. Net combined ratio of 83.6% improved 210 bps year over year.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended upward during the past month.
The consensus estimate has shifted 11.31% due to these changes.
VGM Scores
At this time, Amerisafe has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Amerisafe has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
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AMERISAFE, Inc. (AMSF) : Free Stock Analysis Report
