Should You Add American Equity To Your Portfolio?

On Nov 19, Zacks Investment Research upgraded American Equity Investment Life Holding Co. AEL to a Zacks Rank #1 (Strong Buy).

Why the Upgrade?

American Equity witnessed rising earnings estimates on the back of solid third-quarter results.

The company delivered earnings of 81 cents per share in the third quarter that outperformed the Zacks Consensus Estimate by 62% and improved year over year by a penny.

Sales in the quarter increased 2% year over year. Net investment income in the third quarter increased 9% along with an improvement in average yield on invested assets.

Total benefits and expenses lowered 28% largely due to less interest expenses, decrease in insurance policy benefits, and change in future policy benefits and amortization of deferred policy acquisition costs.

The company also scores strongly with the credit rating agencies. Standard & Poor's affirmed its positive outlook as the company successfully reduced its debt leverage and lowered adjusted debt to capital ratio to below 20%. This in turn might lead to a rating upgrade.

These positives prompted a rise in the Zacks Consensus Estimate for 2014 and 2015 as most of the estimates moved up over the last 30 days. It increased 16% to $2.29 for 2014 and 5% to $2.33 for 2015.

The above factors clearly indicate that American Equity is a good investment choice at present and is likely to outperform the broader market in the near team.

Other Stocks to Consider

Investors interested in life insurers may also consider Fidelity & Guaranty Life Common FGL, Lincoln National Corporation LNC and StanCorp Financial Group Inc. SFG. While Fidelity & Guaranty sports a Zacks Rank #1 (Strong Buy), Lincoln National and StanCorp Financial carry Zacks Rank #2 (Buy).
 

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LINCOLN NATL-IN LNC: Free Stock Analysis Report
 
STANCORP FNL CP SFG: Free Stock Analysis Report
 
AMER EQUITY INV AEL: Free Stock Analysis Report
 
FIDELITY&GUARNT FGL: Free Stock Analysis Report
 
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Zacks Investment Research