Why AmTrust Financial (AFSI) Is Up Today

NEW YORK (TheStreet) -- AmTrust Financial Services (AFSI) was gaining 10.9% to $34.38 Thursday following a strong fourth-quarter earnings report.

In its fourth-quarter results AmTrust Financial posted earnings of 82 cents a share and operating earnings of $1.03 a share. Capital IQ Consensus Estimate called for earnings of 78 cents a share. Revenue rose 76.9% to $816.4 million in the quarter, compared to analyst estimates of $639.3 million.

"Our strong fourth quarter and year end results underscore the excellent momentum that AmTrust continues to experience across all our business lines," AmTrust Financial CEO and president Barry Zyskind said in a press release. "This performance reflects several important factors that are advancing AmTrust's competitive edge."

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TheStreet Ratings team rates AMTRUST FINANCIAL SERVICES as a Buy with a ratings score of A-. TheStreet Ratings Team has this to say about their recommendation:

"We rate AMTRUST FINANCIAL SERVICES (AFSI) a BUY. This is based on the convergence of positive investment measures, which should help this stock outperform the majority of stocks that we rate. The company's strengths can be seen in multiple areas, such as its robust revenue growth, impressive record of earnings per share growth, notable return on equity, largely solid financial position with reasonable debt levels by most measures and compelling growth in net income. We feel these strengths outweigh the fact that the company shows weak operating cash flow."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • AFSI's very impressive revenue growth greatly exceeded the industry average of 25.1%. Since the same quarter one year prior, revenues leaped by 57.5%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • AMTRUST FINANCIAL SERVICES has improved earnings per share by 23.3% in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past two years. We feel that this trend should continue. During the past fiscal year, AMTRUST FINANCIAL SERVICES increased its bottom line by earning $2.37 versus $2.27 in the prior year. This year, the market expects an improvement in earnings ($3.10 versus $2.37).
  • The return on equity has improved slightly when compared to the same quarter one year prior. This can be construed as a modest strength in the organization. In comparison to the other companies in the Insurance industry and the overall market, AMTRUST FINANCIAL SERVICES's return on equity significantly exceeds that of the industry average and is above that of the S&P 500.
  • AFSI's debt-to-equity ratio of 0.67 is somewhat low overall, but it is high when compared to the industry average, implying that the management of the debt levels should be evaluated further.
  • The company, on the basis of net income growth from the same quarter one year ago, has significantly underperformed compared to the Insurance industry average, but is greater than that of the S&P 500. The net income increased by 39.5% when compared to the same quarter one year prior, rising from $43.23 million to $60.29 million.

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