Assurant, Inc. (AIZ) provides lifestyle and housing solutions, protecting and connecting major consumer purchases internationally. The company operates through two segments: Global Lifestyle and Global Housing. Also, AIZ has an ISS Governance QualityScore of 3, indicating low governance risk.
American media personality and the host of CNBC’s “Mad Money” show Jim Cramer stated his preference for AIZ stock due to its low volatility and relatively stable year-to-date performance. Shares of AIZ have gained 10% year-to-date and 11.3% over the past year, outperforming major benchmark indexes.
Here’s what could shape AIZ’s performance in the near term:
Stable Growth Story
AIZ’s revenues increased at CAGRs of 5% and 8.1% over the past three years and past five years, respectively. The company’s EBITDA rose at a rate of 14.2% per annum over the past three years, while its net income improved at a 63.4% CAGR over this period.
Furthermore, net income increased at a rate of 22.6% per annum over the past five years. EPS rose at CAGRs of 29.9% and 4.9% over the past three and five years, respectively.
In addition, the company’s trailing-12-month revenues and net income increased 6.9% and 201% year-over-year, respectively. AIZ’s trailing-12-month EBITDA improved 13.6% from the same period last year, while trailing-12-month EPS rose 25.2% year-over-year. Moreover, trailing-12-month levered free cash flow increased 62.2% year-over-year.
Low Valuation
AIZ’s forward non-GAAP PEG multiple of 0.76 is 26.2% lower than the industry average of 1.03. In addition, the stock’s forward EV/EBITDA and EV/Sales ratios of 9.07 and 0.97 are lower than the industry averages of 9.70 and 2.55, respectively.
Also, AIZ is currently trading 0.88x its forward sales, 68.6% lower than the industry average of 2.78x.
Consensus Rating and Price Target Indicate Potential Upside
Each of the three Wall Street analysts that rated AIZ has rated it Buy. The 12-month median price target of $213.33 indicates a 23.9% potential upside from the last closing price of $169.85. The price targets range from a low of $205.00 to a high of $220.00.
Impressive POWR Ratings Component Grades
According to our proprietary POWR Ratings system, AIZ has a B grade for Sentiment and Momentum. The POWR ratings are calculated considering 118 different factors, with each factor weighted to an optimal degree.
Analysts expect the company’s revenues and EPS to improve 3.5% and 7.4% year-over-year to $2.63 billion and $3.21, respectively, in the fiscal second quarter (ending June). This justifies the Sentiment grade.
In addition, the stock is currently trading above its 50-day moving average of $167.19, indicating an uptrend and justifying the Momentum grade.
Of the nine stocks in the Insurance – Accident & Supplemental industry, AIZ is ranked #2.
Beyond what I’ve stated above, view AIZ ratings for Growth, Stability, Value, and Quality here.
Bottom Line
Given the bearish market trends and surging volatility, investing in low beta stocks like AIZ can help investors hedge their portfolios against the market risks. AIZ has a 0.56 beta. Given its solid financials and stable growth prospects, AIZ could be an ideal investment.
How Does Assurant (AIZ) Stack Up Against its Peers?
While AIZ has a C rating in our proprietary rating system, one might want to consider looking at its industry peer, Unum Group (UNM), which has a B (Buy) rating.
AIZ shares were trading at $171.63 per share on Tuesday morning, up $1.78 (+1.05%). Year-to-date, AIZ has gained 11.00%, versus a -20.76% rise in the benchmark S&P 500 index during the same period.
About the Author: Aditi Ganguly
Aditi is an experienced content developer and financial writer who is passionate about helping investors understand the do’s and don'ts of investing. She has a keen interest in the stock market and has a fundamental approach when analyzing equities.
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