1. Executive Summary
- Company: AMERISAFE Inc.
- Ticker: AMSF
- Industry: Property & Casualty Insurance
- Exchange: NASDAQ
- Investment Recommendation: Hold — While the company maintains strong financial health and consistent dividend payouts, recent declines in revenue and net income suggest a cautious approach.
2. Company Overview
- Business Model: AMERISAFE specializes in providing workers’ compensation insurance to small and mid-sized employers in hazardous industries, including construction, trucking, agriculture, and manufacturing.
- Industry Position: The company operates in 27 states across the U.S., focusing on high-risk sectors where specialized underwriting and loss control services are essential.
- Key Products/Services: Workers’ compensation insurance policies tailored for high-hazard industries.
- Management: Headquartered in DeRidder, Louisiana, AMERISAFE has been in operation since 1985, with a management team experienced in underwriting and risk management.
3. Financial Analysis
- Revenue Growth:
- 2024 Revenue: $309 million (up from $306.9 million in 2023)
- Profitability:
- Net Income (2024): $55.6 million (down from $60.6 million in 2023)
- Net Profit Margin (2024): 17.9%
- Earnings Per Share (EPS):
- Trailing Twelve Months (TTM) EPS: $2.89
- Balance Sheet:
- Total Assets: $1.2 billion
- Total Liabilities: $0.9 billion
- Shareholders’ Equity: $260.8 million
- Cash Flow:
- Operating Cash Flow (2024): $85 million
- Free Cash Flow (2024): $80 million
4. Stock Performance
- Current Price: $47.17
- 52-Week Range: $41.97 – $60.24
- Market Capitalization: Approximately $1.0 billion
- Beta: 0.40 (indicating low volatility)
- Recent Trends: The stock has declined approximately 5.7% over the past three months, reflecting concerns over declining earnings.
5. Valuation Analysis
- Price-to-Earnings (P/E) Ratio: 21.1x
- Price-to-Book (P/B) Ratio: 3.44x
- Analyst Price Targets:
- Average: $57.67
- High: $65.00
- Low: $54.00
- Implied Upside: Approximately 22% from the current price
6. Industry & Market Analysis
- Industry Trends: The workers’ compensation insurance market is experiencing increased competition, leading to pressure on premium rates. Additionally, economic downturns may lead to higher claim frequencies.
- Market Share: AMERISAFE holds a niche position in high-hazard industries, allowing for specialized underwriting and risk management services.
- Macroeconomic Factors: Economic fluctuations and regulatory changes in workers’ compensation laws can impact the company’s underwriting profitability.
7. Risk Analysis
- Market Risks: Increased competition may lead to reduced premium rates and market share.
- Financial Risks: Declining net income and potential increases in claim frequency could pressure profitability.
- Regulatory Risks: Changes in state workers’ compensation regulations could affect underwriting practices and profitability.
- Geopolitical Risks: While primarily operating in the U.S., broader economic and political instability can indirectly impact operations.
8. Growth Catalysts
- New Products/Services: Development of enhanced risk management and loss control services tailored for high-hazard industries.
- Expansion Plans: Potential to enter additional states or sectors within the high-hazard market segment.
- Mergers & Acquisitions (M&A): Strategic acquisitions could expand market presence and diversify offerings.
- Industry Trends: Emphasis on workplace safety and regulatory compliance may increase demand for specialized workers’ compensation insurance.
9. Analyst Sentiment
- Consensus Rating: Hold
- Analyst Coverage: Limited coverage with a consensus suggesting cautious optimism.
- Recent News: Analysts have adjusted price targets downward in response to declining earnings, reflecting a more conservative outlook.
10. Conclusion
AMERISAFE Inc. maintains a strong position in the niche market of workers’ compensation insurance for high-hazard industries. While the company exhibits solid financial health and consistent dividend payouts, recent declines in revenue and net income warrant a cautious approach. Investors should monitor the company’s ability to manage underwriting profitability amid competitive pressures and economic fluctuations.
11. Appendix
- Recent Stock Prices:
| Date | Closing Price (USD) |
|---|---|
| 2025-05-09 | $47.17 |
| 2025-05-08 | $47.27 |
| 2025-05-07 | $46.50 |
| 2025-05-06 | $46.00 |
| 2025-05-05 | $45.50 |