Why Horace Mann Educators Stock Soared Today
Key Points
It did extremely well with its core insurance operations.
It also raised its profitability guidance for the second quarter in a row.
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Horace Mann Educators (NYSE:HMN) released its latest quarterly results after market close on Tuesday, and the market reacted strongly the next day. Thanks to significant top- and bottom-line beats, that reaction was very positive, and the company's stock raced to a nearly 6% gain on Hump Day.
A record-setting quarter
Horace Mann, a niche insurance and financial company which specializes in serving the educational market, booked revenue of just over $439 million in its third quarter. That was marginally higher on a year-over-year basis.
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The company didn't hesitate to mention that it notched a new all-time high for "core" profitability, i.e., net income not under generally accepted accounting principles (non-GAAP, or adjusted). This metric, which strips out portfolio losses and one-time expenses, zoomed 50% higher to more than $85 million, or $2.06 per share.
Both line items crushed the average analyst estimates. Pundits tracking Horace Mann stock were modeling only $323 million for revenue, and $1.08 per share for adjusted profitability.
Key metrics going up
Horace Mann quoted its CEO Marita Zuraitis as saying that the company's far better-than-expected performance was due mainly to "excellent underwriting performance in our property and casualty business, higher net investment income, and continued growth across our diversified business."
With that, Horace Mann raised its full-year guidance for core earnings per share (EPS) for the second quarter in a row. This is now $5.75 to $5.95, up substantially from the previous forecast of $4.60 to $4.90.
The company's clearly doing well in its ever-important insurance operations and directing its float into very productive investments. Given that, I'd say the investor reaction to the quarterly results was understated, if anything.
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Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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