Assurant (AIZ) Up 8.7% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Assurant (AIZ). Shares have added about 8.7% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is Assurant due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers. Assurant Q3 Earnings Beat on Solid Global Housing Growth, View RaisedAssurant, Inc. reported third-quarter 2024 net operating income of $3.00 per share, which beat the Zacks Consensus Estimate by 20%. However, the bottom line declined 30.7% year over year. Total revenues increased 7.6% year over year to nearly $3 billion, driven by higher net earned premiums, fees and other income and net investment income. The top line beat the Zacks Consensus Estimate by 2.6%. Net earned premiums, fees and other income increased 7% year over year to $2.9 billion, driven by growth across both segments. Our estimate was $2.8 billion.Net investment income was down 10.9% year over year to $129.7 million. Our estimate was $130.7 million. The Zacks Consensus Estimate was pegged at $127 million. Total benefits, loss and expenses increased 2.2% to $2.8 billion, mainly due to higher policyholders benefit. Our estimate was $2.5 billion. Adjusted EBITDA, excluding reportable catastrophes, increased 31.6% to $ 246.9 million. Our estimate was $397.7 million.Segmental PerformanceRevenues at Global Housing increased 9.7% year over year to $635.5 million, primarily driven by higher net earned premiums and net investment income. The figure was higher than our estimate of $577 million. The Zacks Consensus Estimate was $621 million. Net earned premiums, fees and other income increased 9% year over year, driven by Homeowners’ top-line growth, including growth in policies in force and higher average premiums within lender-placed. Adjusted EBITDA, excluding catastrophes, increased 10.2% year over year to $229.2 million on continued top-line growth within Homeowners, including higher policies in force from new lender-placed programs and portfolios. The figure was higher than our estimate of $167.7 million. The Zacks Consensus Estimate was $169 million.Revenues at Global Lifestyle declined 3% year over year to $2.3 billion, owing to a drop in net investment income. Revenues matched the Zacks Consensus Estimate and our estimate. Adjusted EBITDA, excluding catastrophes, of $184.3 million decreased 10% year over year, attributable to unfavorable foreign exchange and modestly lower results within Global Automotive, where elevated losses within select ancillary products. The figure was lower than our estimate of $258 million. The Zacks Consensus Estimate was pegged at $229 million.Adjusted EBITDA loss at Corporate & Other was $29.8 million, narrower than the year-ago quarter’s adjusted EBITDA loss of $29.9 million. The narrower loss was attributable to higher net investment income from higher asset levels and yields. The Zacks Consensus Estimate was pegged at a loss of $27 million.Financial PositionLiquidity was $638 million as of Sept. 30, 2024, which was $411 million higher than the company’s current targeted minimum level of $225 million. Total assets increased 5.1% to $35.3 billion as of Sept. 30, 2024, from the end of 2023. Total shareholders’ equity came in at $5.3 billion, up 9.3% year over year. Debt-to-total capital ratio of 28.4 improved 180 bps from the 2023 end level.Share Repurchase and Dividend UpdateIn the third quarter, Assurant returned $138 million to shareholders, comprising $100 million in buybacks and $38 million in dividends. Through Nov. 2, the insurer bought back another $20 million worth of shares and now has $475 million remaining under the current repurchase authorization.2024 Guidance RaisedAssurant expects adjusted EBITDA to increase in low double digits, led by strong growth in Global Housing and modest growth in Global Lifestyle. It expected the same to increase in high single digits earlier. Global Housing adjusted EBITDA, excluding reportable catastrophes, is expected to increase and deliver strong growth, mainly driven by top-line growth in Homeowners, favorable non-catastrophe loss experience, benefits from expense leverage and lower catastrophe reinsurance premiums.Global Lifestyle adjusted EBITDA is expected to increase modestly. The company continues to expect organic growth and improved profitability in Connected Living programs, partially offset by investments to support growth, including new client and program implementation expenses. It now expects Global Automotive to be down due to continued loss pressure from inflation and elevated losses in select ancillary products. Corporate and Other adjusted EBITDA loss is expected to approximate $115 million.The company now expects a lower effective tax rate of approximately 18% to 20%. It continues to expect depreciation expense of approximately $135 million, interest expense of approximately $107 million and amortization of purchased intangible assets of approximately $70 million. Adjusted earnings per share are expected to grow in mid- to high-teens, excluding reportable catastrophes. It earlier expected adjusted earnings per share, excluding reportable catastrophes, to grow in low double digits. The insurer expects share repurchases worth $300 million, reflecting a strong capital position and a comprehensive catastrophe reinsurance program. How Have Estimates Been Moving Since Then?In the past month, investors have witnessed an upward trend in estimates revision.The consensus estimate has shifted 12.84% due to these changes.VGM ScoresCurrently, Assurant has an average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock was allocated a grade of A on the value side, putting it in the top 20% for this investment strategy.Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.OutlookEstimates have been broadly trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Assurant has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.Performance of an Industry PlayerAssurant is part of the Zacks Insurance - Multi line industry. Over the past month, The Hartford (HIG), a stock from the same industry, has gained 3.3%. The company reported its results for the quarter ended September 2024 more than a month ago.The Hartford reported revenues of $4.67 billion in the last reported quarter, representing a year-over-year change of +10.9%. EPS of $2.53 for the same period compares with $2.29 a year ago.The Hartford is expected to post earnings of $2.69 per share for the current quarter, representing a year-over-year change of -12.1%. Over the last 30 days, the Zacks Consensus Estimate remained unchanged.The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for The Hartford. Also, the stock has a VGM Score of A.5 Stocks Set to DoubleEach was handpicked by a Zacks expert as the #1 favorite stock to gain +100% or more in 2024. While not all picks can be winners, previous recommendations have soared +143.0%, +175.9%, +498.3% and +673.0%.Most of the stocks in this report are flying under Wall Street radar, which provides a great opportunity to get in on the ground floor.Today, See These 5 Potential Home Runs >>Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report Assurant, Inc. (AIZ): Free Stock Analysis Report The Hartford Financial Services Group, Inc. (HIG): Free Stock Analysis ReportTo read this article on Zacks.com click here.Zacks Investment ResearchWeiter zum vollständigen Artikel bei Zacks Weiter zum vollständigen Artikel bei Zacks