On Tuesday, Keefe, Bruyette & Woods adjusted their stance on shares of Horace Mann Educators (NYSE:HMN), downgrading the stock from Outperform to Market Perform. However, the firm raised its price target on the shares to $44.00, up from the previous target of $39.00.
The change in rating comes after Horace Mann's shares experienced a significant rise following recent election results. The analyst at Keefe, Bruyette & Woods noted the strong performance of the stock in the market as a key reason for the downgrade, suggesting that the current share price adequately reflects the company's future prospects.
The firm has also increased its earnings per share (EPS) estimates for Horace Mann. The 2024 EPS estimate was raised to $2.60 from $2.50, taking into account better-than-expected performance in the third quarter of 2024. Furthermore, the estimates for 2025 and 2026 have been adjusted upward to $3.55 and $4.00, respectively, from the previous forecasts of $3.50 and $3.95.
The revised EPS expectations are based on anticipated higher income from the Property & Casualty (P&C) and Supplemental & Group Benefits sectors. This is expected to be partially balanced by a projected decrease in income from the Life & Retirement segment.
The analyst's comments highlighted the improvement prospects in Horace Mann's P&C margins, which are considered to be factored into the current valuation of the stock. The increase in the price target to $44.00 is justified by applying a multiple of 12.4 times the estimated 2025 EPS and 11.0 times the projected 2026 EPS.
In other recent news, Horace Mann Educators Corp (NYSE:HMN). has reported robust growth in its third quarter of 2024. The company's core earnings increased by 73% to $31.3 million, while revenues rose by 9% despite a $22.5 million impact from Hurricane Helene. The company also noted improvements in loss ratios due to a multi-year profitability strategy and sales growth in Auto, Life, and Individual Supplemental Lines.
The company's management maintains its full-year core EPS guidance of $2.40 to $2.70 and remains on track to achieve strategic goals, including a double-digit return on equity by 2025. However, the Supplemental & Group Benefits segment experienced a 6% decrease in core earnings. In terms of investment, the company repurchased 256,000 shares at a cost of $8.5 million. These are among the recent developments for Horace Mann Educators Corp.
InvestingPro Insights
Recent data from InvestingPro adds depth to Keefe, Bruyette & Woods' analysis of Horace Mann Educators (NYSE:HMN). The company's market cap stands at $1.72 billion, with a P/E ratio of 16.77, aligning closely with the analyst's valuation considerations.
InvestingPro Tips highlight HMN's strong financial position and growth trajectory. The company has raised its dividend for 14 consecutive years and maintained payments for 33 years, underscoring its commitment to shareholder returns. This is particularly relevant given the analyst's focus on the company's valuation and future prospects.
Moreover, HMN's revenue growth of 10.71% over the last twelve months supports the analyst's upward revision of EPS estimates. The company's strong return over the last three months (27.92%) and trading near its 52-week high (97.8% of the high) corroborate the significant rise in share price noted in the report.
For investors seeking a more comprehensive analysis, InvestingPro offers 11 additional tips for Horace Mann Educators, providing a deeper understanding of the company's financial health and market position.
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