Insurance Stocks

Assurant Inc Valuation – March 2019 #AIZ

Company Profile (excerpt from Reuters): Assurant, Inc., incorporated on October 10, 2003, is a provider of risk management solutions in the housing and lifestyle markets. The Company operates in North America, Latin America, Europe and Asia. The Company’s segments include Global Housing, Global Lifestyle and Global Preneed. Through its Global Housing segment, it provides lender-placed homeowners, manufactured housing and flood insurance and renters insurance and related products (multi-family housing business). Through its Global Lifestyle segment, it provides mobile device protection products and related services and extended service products and related services for consumer electronics and appliances (global connected living business); vehicle protection services, and credit insurance. The Global Preneed segment provides pre-funded funeral insurance and annuity products.

 

Downloadable PDF version of this valuation:

ModernGraham Valuation of AIZ – March 2019

Stage 1: Is this company suitable for the Defensive Investor or the Enterprising Investor?

What kind of Intelligent Investor are you?

Defensive Investor; must pass all 6 of the following tests.
1. Adequate Size of the Enterprise Market Cap > $2Bil $5,832,744,329 Pass
2. Earnings Stability Positive EPS for 10 years prior Pass
3. Dividend Record Dividend Payments for 10 years prior Pass
4. Earnings Growth Increase of 33% in EPS in past 10 years using 3 year averages at beginning and end 58.77% Pass
5. Moderate PEmg Ratio PEmg < 20 13.36 Pass
6. Moderate Price to Assets PB Ratio < 2.5 OR PB*PEmg < 50 1.17 Pass
Enterprising Investor; must pass all 3 of the following tests, or be suitable for the Defensive Investor.
1. Earnings Stability Positive EPS for 5 years prior Pass
2. Dividend Record Currently Pays Dividend Pass
3. Earnings Growth EPSmg greater than 5 years ago Pass

 

Stage 2: Determination of Intrinsic Value

EPSmg $7.08
MG Growth Estimate 7.19%
MG Value $161.89
Opinion Undervalued
MG Grade A
MG Value based on 3% Growth $102.61
MG Value based on 0% Growth $60.15
Market Implied Growth Rate 2.43%
Current Price $94.56
% of Intrinsic Value 58.41%

Assurant, Inc. qualifies for both the Defensive Investor and the Enterprising Investor. In fact, the company meets all of the requirements of both investor types, a rare accomplishment indicative of the company’s strong financial position . The Enterprising Investor has no initial concerns. As a result, all value investors following the ModernGraham approach should feel comfortable proceeding with the analysis.

As for a valuation, the company appears to be Undervalued after growing its EPSmg (normalized earnings) from $4.78 in 2015 to an estimated $7.08 for 2019. This level of demonstrated earnings growth outpaces the market’s implied estimate of 2.43% annual earnings growth over the next 7-10 years. As a result, the ModernGraham valuation model, based on Benjamin Graham’s formula, returns an estimate of intrinsic value above the price.

At the time of valuation, further research into Assurant, Inc. revealed the company was trading below its Graham Number of $124.38. The company pays a dividend of $2.28 per share, for a yield of 2.4%, putting it among the best dividend paying stocks today. Its PEmg (price over earnings per share – ModernGraham) was 13.36, which was below the industry average of 26.11, which by some methods of valuation makes it one of the most undervalued stocks in its industry.

Assurant, Inc. fares extremely well in the ModernGraham grading system, scoring an A.

Stage 3: Information for Further Research

Graham Number $124.38
PEmg 13.36
PB Ratio 1.17
Dividend Yield 2.41%
TTM Dividend $2.28
Number of Consecutive Years of Dividend Growth 15

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Most Recent Balance Sheet Figures

Balance Sheet Information 12/1/2018
Long-Term Debt & Capital Lease Obligation $2,006,000,000
Total Assets $41,089,300,000
Intangible Assets $6,102,000,000
Total Liabilities $35,955,400,000
Shares Outstanding (Diluted Average) 63,600,000

Earnings Per Share History

EPS History
Next Fiscal Year Estimate $8.35
Dec2018 $3.98
Dec2017 $9.39
Dec2016 $9.13
Dec2015 $2.05
Dec2014 $6.44
Dec2013 $6.30
Dec2012 $5.67
Dec2011 $5.51
Dec2010 $2.50
Dec2009 $3.63
Dec2008 $3.76
Dec2007 $5.38
Dec2006 $5.57
Dec2005 $3.50
Dec2004 $2.53
Dec2003 $1.70
Dec2002 -$9.17
Dec2001 $0.90
Dec2000 $0.85

Earnings Per Share – ModernGraham History

EPSmg History
Next Fiscal Year Estimate $7.08
Dec2018 $6.36
Dec2017 $7.25
Dec2016 $6.10
Dec2015 $4.78
Dec2014 $5.86
Dec2013 $5.29
Dec2012 $4.59
Dec2011 $4.09
Dec2010 $3.64
Dec2009 $4.26
Dec2008 $4.44
Dec2007 $4.43
Dec2006 $2.91
Dec2005 $1.02
Dec2004 -$0.36
Dec2003 -$1.59

Recommended Reading:

Other ModernGraham posts about the company

Assurant Inc Valuation – June 2018 $AIZ
Assurant Inc Valuation – March 2017 $AIZ
21 Best Undervalued Stocks of the Week – 8/27/16
Assurant Inc Valuation – August 2016 $AIZ
Assurant Inc Valuation – February 2016 $AIZ

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Disclaimer:

The author did not hold a position in any company mentioned in this article at the time of publication and had no intention of changing that position within the next 72 hours.  See my current holdings here.  This article is not investment advice; any reader should speak to a registered investment adviser prior to making any investment decisions.  ModernGraham is not affiliated with the company in any manner.  Please be sure to review our detailed disclaimer.

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