Assurant, Inc. AIZ shares are trading at a discount compared to the Zacks Multi-line Insurance industry. Its forward price-to-book value of 2.07X is lower than the industry average of 2.37X, the Finance sector’s 4.09X and the Zacks S&P 500 Composite’s 8.8X. The multiline insurer has a Value Score of A.
Image Source: Zacks Investment Research
The insurer has a market capitalization of $10.82 billion. The average volume of shares traded in the last three months was 0.3 million. The insurer has a solid track record of beating earnings estimates in each of the last four quarters, the average being 20.32%.
Shares of other multiline insurers, such as MetLife, Inc. MET, Prudential Financial, Inc. PRU and Radian Group Inc. RDN are also trading at a discount to the industry average.
AIZ is an Outperformer
Shares of Assurant have gained 24.8% in the past six months, outperforming its industry, the Finance sector and the Zacks S&P 500 composite’s growth of 3.6%, 10% and 8.2%, respectively.
AIZ Outperforms Industry, Sector, S&P in 6 Months
Image Source: Zacks Investment Research
Growth Projection for AIZ
The Zacks Consensus Estimate for AIZ’s 2025 earnings per share and revenues indicates an increase of 16.7% and 3.4%, respectively, from the corresponding 2024 estimates.
Earnings have grown 20.2% in the past five years, better than the industry average of 9.2%.
Optimistic Analyst Sentiment on AIZ
One of the five analysts covering the stock has raised estimates for 2025 over the past 60 days. Thus, the Zacks Consensus Estimate for 2025 moved 1% north in the last 60 days.
Assurant’s Favorable Return on Capital
Return on equity in the trailing 12 months was 17.4%, better than the industry average of 15.3%. This highlights the company’s efficiency in utilizing shareholders’ funds.
Also, the return on invested capital (ROIC) has been increasing over the last few quarters as the company raised its capital investment over the same time frame, reflecting AIZ’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 11.1%, better than the industry average of 2.3%.
Factors Impacting AIZ
Assurant’s focus on growing fee-based capital-light businesses, which account for 52% of segmental revenues, bodes well for growth. Management estimates that contribution from the same will continue to grow in double digits over the long term.
Better Homeowners’ performance reflecting higher lender-placed net earned premiums should drive better results at Global Housing. At the same time, growth across Connected Living and Global Automotive should drive Global Lifestyle.
The insurer remains focused on ramping up the Connected Living platform, deploying innovative products and services, and adding new partnerships. These initiatives are expected to double the margins of Connected Living to 8% over the long term.
Investment income, which has been witnessing an increase in net investment income over the past few years, should benefit from higher yields on fixed-maturity securities.
Wealth Distribution
AIZ has a solid capital management policy in place. Assurant’s board of directors approved an 11% hike in cash dividend in November 2024. AIZ’s distribution of wealth to shareholders via dividend hikes is impressive. The recent hike marks the insurer increasing dividends for straight 20 quarters. Assurant expects to return $300 million to shareholders through share repurchases in 2024. Notably, its free cash flow conversion has remained more than 100% over the last few quarters, reflecting its solid earnings.
Final Take on AIZ
Well-performing Global Lifestyle business, growth of fee-based capital-light businesses, solid capital management, favorable estimates and effective capital deployment should favor Assurant’s results. AIZ's higher return on capital and favorable growth estimates present significant growth opportunities.
Assurant also has a VGM Score of B. Stocks with a favorable VGM Score are those with the most attractive value, best growth and most promising momentum compared with peers. Coupled with the positives and the affordability of the stock, the time appears right for potential investors to bet on this Zacks Rank #2 (Buy) insurer. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
5 Stocks Set to Double
Each 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 >>MetLife, Inc. (MET) : Free Stock Analysis Report
Prudential Financial, Inc. (PRU) : Free Stock Analysis Report
Assurant, Inc. (AIZ) : Free Stock Analysis Report
Radian Group Inc. (RDN) : Free Stock Analysis Report
To read this article on Zacks.com click here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
