Horace Mann Educators - Value
11 December 2012 - 11:00AM
Zacks
Horace Mann Educators Corp. (HMN) reported strong
third-quarter results in late October, which has boosted earnings
estimates for this multi-line insurance provider. Moreover, with a
price-to-book (P/B) ratio of just 0.62, this Zacks #2 Rank (Buy) is
a true value pick.
Strong Third Quarter
On October 24, Horace Mann Educators reported third quarter
operating earnings of 62 cents per share, which was 55% above the
Zacks Consensus Estimate. It also surged nearly 170% from 23 cents
in the year-ago quarter. The quarter benefited from lower
catastrophe losses and strong performances across all segments.
Total revenue slipped 1.6% year over year to $257 million in the
quarter, but comfortably surpassed the Zacks Consensus Estimate by
3.8%.
Total benefits, losses and expenses declined 8.2% year over
year, largely due to lower benefits, claims and settlement
expenses.
Based on solid results at the annuity and life segments along
with lower catastrophe losses, Horace Mann Educators expects to
post operating earnings between $1.85 and $1.95 per share in
2012.
During the third quarter, the company spent $1.7 million to buy
back 96,029 shares.
Recently, on Dec 5, the Board of Directors approved a 23% hike
in its quarterly dividend. The increased dividend of 16 cents per
share will be paid on Dec 31 to shareholders of record as of Dec
17.
Positive Earnings Estimate Revisions
The Zacks Consensus Estimate for 2012 increased 9.4% to $1.86 in
the past 60 days, as both estimates moved north. This suggests a
year-over-year increase of approximately 67.1%. For 2013, the Zacks
Consensus Estimate increased by 1% to $2.05 over the same
timeframe, as 1 of 2 estimates headed higher. This translates into
a year-over-year increase of 10.5%.
Attractive Valuation
Along with a very attractive P/B multiple, Horace Mann Educators
has a price-to-earnings (P/E) ratio as low as 10.5 (a P/B ratio
under 3.0 and P/E ratio below 15.0 indicate value).
Moreover, the company has a 1-year return on equity (ROE) of
7.8%, higher than its peer group average of 5.5%.
Headquartered in Springfield, Illinois and founded in 1945,
Horace Mann Educators Corp., through its subsidiaries, provides
services that primarily focus on the financial needs of educators.
Operating in the Unites States with 1,596 employees, Horace Mann
provides auto and homeowners insurance, retirement annuities, life
insurance and other financial solutions. It has a market cap of
$763.9 million.
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