Platinum Underwriters Touches 52-Week High - Analyst Blog

On May 29, 2014, shares of Platinum Underwriters Holdings Ltd. PTP scaled a 52-week high of $64.96. With about 0.15 million shares exchanging hands in the last trading session, the share price moved up 0.80% to close at $64.24 yesterday. The momentum was propelled by a sustained earnings outperformance, continued focus on enhancement of shareholders' value and strong scoring from the rating agencies. The year-to-date return from the stock came in at 4.83%, ahead of the S&P's return of 3.87%.

With respect to earnings performance, this Zacks Rank #2 (Buy) property and casualty insurer has a delivered positive surprise in the last four quarters with an average beat of 45.15%, the highest surprise of 80.16% being clocked in the last quarter.

Platinum Underwriters, in its concerted effort to return more value to shareholders, extended te share repurchase program by about $154.8 million to $250.0 million. In the last quarter, the company bought back about 1.3 million shares for $75.8 million. These capital deployment activities are supported by Platinum Underwriters' ability to generate solid cash flows. Cash inflow from operations was $6.3 million in the last quarter, comparing favorably with cash outflow of $12.6 million in the year-ago quarter.

Platinum Underwriters has strong scores with the credit rating agencies. Recently, A.M. Best affirmed the issuer credit rating (ICR) of “bbb” and financial strength rating of A (Excellent) and ICR of “a” of its subsidiaries. The outlook remains stable.

A sustained solid operational and financial performance by Platinum Underwriters helped the Zacks Consensus Estimate to move north as most of the estimates were raised in the last 60 days. With all the estimates moving up for 2014, the Zacks Consensus Estimate increased by 31.2% to $5.72. The same for 2015 moved up 3.3% to $4.39 as most of the estimates were revised higher. The expected long-term growth rate for the stock is 8%.

Other Stocks to Consider

Some of the other property and casualty insurers worth considering include W.R. Berkley Corporation WRB, Atlas Financial Holdings, Inc. AFH and Endurance Specialty Holdings Ltd. ENH. All these sport a Zacks Rank #1 (Strong Buy).