CNinsure Shares Surge on Solid Q1 Earnings - Analyst Blog

Shares of CNinsure Inc, CISG gained 13.26% to close at $7.26 after a stellar first-quarter performance by the insurance broker. Net income of 14 cents per share outpaced the Zacks Consensus Estimate by about 56% and doubled year over year.

The improvement stemmed from strong performance at the insurance brokerage business well supported by agency business, insurance and claims adjusting business.

Behind the Headlines

CNinsure generated total revenue of $75 million, up 16.2% year over year. The improvement was driven by higher net revenue at insurance agency business, insurance brokerage business and claims adjusting business that more than offset the decline in revenues from other business.

While higher revenues at insurance agency business were largely backed by an increase in P&C insurance agency business, claims adjusting business revenues benefitted from an improvement in non-auto insurance-related, claims-adjusting business. Insurance brokerage business revenues benefitted from a larger customer base.

Total operating costs and expenses increased 13.3% year over year to $72.9 million.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) increased 23.6% year over year to $6.2 million. Adjusted EBITDA margin expanded 50 basis points to 8.3%.

Interest income increased 3.2% year over year to $3.6 million in the quarter, driven by an increase in receivables.

As of Mar 31, 2014, CNinsure had a distribution and service network of 492 sales and services outlets operating in 28 provinces, up from 481 sales and service outlets operating in 27 provinces as of Mar 31, 2013.

CNinsure exited the quarter with cash and cash equivalents of $356.7 million, down from $378.1 million as of Dec 31, 2013.

Cash from operations in the first quarter totaled $7.9 million.

Outlook

CNinsure projects second quarter 2014 total net revenue to increase 14% year over year.

Zacks Rank and Other Picks

CNinsure carries a Zacks Rank #3 (Hold). Bottom line of insurance brokers Aon plc AON, Erie Indemnity Company ERIE and Arthur J Gallagher & Co. AJG among others, also outperformed their respective Zacks Consensus Estimate in the first quarter. Notably, AON and Erie Indemnity are better-ranked stocks with a Zacks Rank #2 (Buy).