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FBL Financial (FFG) Moves 7.2% Higher: Will This Strength Last?

·2-min read

FBL Financial Group (FFG) shares rallied 7.2% in the last trading session to close at $60.76. This move can be attributable to notable volume with a higher number of shares being traded than in a typical session. This compares to the stock's 1.1% gain over the past four weeks.

The insurer reported first quarter bottom-line that only beat estimates but also increased year-over-year. Quarterly earnings benefited from higher equity income, favorable market performance, benefit of other investment-related income, death benefits that was in line with the expectation and continued investment in the Wealth Management business.

Top line too increased year over year and beat estimates driven by increase in interest sensitive product charges, traditional life insurance premiums, net investment income and other income.

Concurrently, the merger agreement between Farm Bureau Property & Casualty Insurance Company and FBL Financial Group was amended. Farm Bureau Property & Casualty Insurance Company will now pay a purchase consideration of $61 per share in cash or $575 million, that account for an additional $47 million in cash consideration.

Price and Consensus

Price Consensus Chart for FFG
Price Consensus Chart for FFG

This parent company of Farm Bureau Life Insurance is expected to post quarterly earnings of $0.90 per share in its upcoming report, which represents a year-over-year change of +13.9%. Revenues are expected to be $182.99 million, up 35.3% from the year-ago quarter.

Earnings and revenue growth expectations certainly give a good sense of the potential strength in a stock, but empirical research shows that trends in earnings estimate revisions are strongly correlated with near-term stock price movements.

For FBL Financial, the consensus EPS estimate for the quarter has remained unchanged over the last 30 days. And a stock's price usually doesn't keep moving higher in the absence of any trend in earnings estimate revisions. So, make sure to keep an eye on FFG going forward to see if this recent jump can turn into more strength down the road.

The stock currently carries a Zacks Rank 3 (Hold). You can see the complete list of today's Zacks Rank #1 (Strong Buy) stocks here >>>>


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