Small-business insurer has earnings growth, momentum

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New York City-based AmTrust Financial Services is a multinational property and casualty insurer specializing in coverage for small businesses. With a market cap of $4.4-billion ((U.S.), AmTrust offers workers' compensation insurance, extended warranty coverage, specialty middle-market property and casualty insurance and a host of related products and services.

AmTrust has grown earnings at a 24-per-cent pace over the long term (using an average of the 3-, 4- and 5-year EPS growth rates), which the Peter Lynch based model likes. The Lynch model also likes its 0.43 PE-to-growth ratio. The company also has an equity/assets ratio of 15 per cent, far surpassing the Lynch model's 5-per-cent target.

AmTrust has upped EPS in all but one year of the past decade, which the Warren Buffett-based model likes. The company has averaged a 25.1-per-cent return on retained earnings (those not paid out as dividends) over the past decade, which the Buffett model also likes.

The Martin Zweig-based model likes that the company's EPS growth has been fueled by revenue growth -- the firm has grown revenues at a 38-per-cent pace (using an average of the 3-, 4- and 5-year sales growth rates).

AmTrust gets strong interest from the James O'Shaughnessy-based growth model, thanks to its combination of good momentum (92 relative strength over past 12 months) and reasonable 1.1 price/sales ratio. The company also has a strong 19-per-cent return on equity (TTM).

John Reese is long AFSI.

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