HCI Group OKs $40M Share Buyback - Analyst Blog

In its concerted effort to enhance shareholder value, the board of directors of HCI Group Inc. HCI authorized the company to repurchase upto $40 million worth of shares.

The company will buy back the shares over the next one year.

The new authorization by HCI Group is duly supported by the company's solid financial position, with cash and cash equivalents of $293.4 million as of the end of 2013, improving 27.5% over 2012. A sustained solid operational performance continues to cushion HCI Group's sturdy financial position. Share repurchases are broadly intended to lower share count that in turn boosts shareholders' value.

Earlier, the board of directors also approved a 22% increase in the company's quarterly dividend. Its dividend currently yields 2.96% better than the industry average of 2.20%.

Several insurers are in the news presently for their efforts to enhance shareholder value. Recently, the board of directors of First American Financial Corporation FAF increased the share repurchase authorization by $100 million to $250 million. The board of directors of XL Group plc XL approved a $1 billion buyback program while the same at AmTrust Financial Services, Inc. AFSI sanctioned a $150 million buyback program.

Early this month, HCI Group reported operating net income of $1.31 per share for the fourth quarter of 2013. Though the figure missed the Zacks Consensus Estimate by about 13%, it improved 10% year over year largely on the strength of an improved top line.

HCI Group presently carries a Zacks Rank #3 (Hold). With the news of the share buyback authorization poised to boost investor confidence in the stock as well as add to the bottom line, we expect analysts to raise their estimates and exert upward pressure on the Zacks Rank. The stock witnessed no earnings momentum over the last 60 days.