HCI Group to Return Value to Shareholders, OK's Buyback

The board of directors of HCI Group, Inc. HCI recently authorized a share buyback program for returning more value to investors. This latest authorization will allow the company to spend up to $20 million for repurchasing its common stock and the same will continue through Dec 31, 2019.

The company’s previously authorized share repurchase plan, approved on Dec 6, 2017, enabled it to buy back shares up to $20 million. As of Sep 30, 2018, the company had $0.1 million left under this share buyback program, which completed its approved repurchases on Oct 3, 2018.

The property and casualty (P&C) insurer is committed to boosting shareholder value through such share repurchases and dividend hikes. A solid financial position over the years has allowed the company to take part in such endeavors, which in turn, raises investors’ optimism on the stock as well.

The company exited the third quarter with cash and cash equivalents worth approximately $250 million. On the event of settling the convertible notes worth $90 million (due in March 2019) in cash, the company will be still left with $25 million in cash and investments in the holding company plus access to a $65-million revolving credit facility. Hence, we remain optimistic about HCI Group’s efforts in further improving its capital and liquidity position that will not only capacitate the company to return more value to investors but also accelerate its growth in the near term.

Moreover, the company is focused on deploying capital prudently, which in turn, will not only aid the insurer to add shareholder value but also invest in strategic initiatives.

Share repurchases benefit the company’s earnings per share, book value and shareholder equity as shares outstanding trim down. Therefore, share buyback programs buoy hope among investors and increase their confidence in the stock.

Other players from the finance sector, who also aim at improving the shareholder value via share buybacks, dividend hikes and special payouts, recently engaged in such shareholder-friendly moves. In a bid to share more profits with stockholders, board members of Principal Financial Group, Inc. PFG and Chubb Limited CB approved share repurchase programs of $500 million and up to $1.5 billion, respectively, in November this year.

Zacks Rank and Share Price Movement

Currently, HCI Group carries a Zacks Rank #3 (Hold). Shares of the company have outperformed the industry year to date. The stock has soared 78.6% compared with the industry’s increase of 2.2%. We expect top-line growth, better investment results and a solid capital position to drive the stock higher in the near term.

 

Stock That Warrants a Look

Investors interested in a better-ranked stock from the same space can consider The Progressive Corporation PGR, which holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Progressive Corporation offers personal and commercial auto insurance, residential property insurance and other specialty property-casualty insurance and related services, primarily in the United States. The company delivered positive surprises in all the trailing four reported quarters, the average being 13.48%.

Looking for Stocks with Skyrocketing Upside?

Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.

Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look.

See the pot trades we're targeting>>

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report
 
Principal Financial Group, Inc. (PFG) : Free Stock Analysis Report
 
Chubb Limited (CB) : Free Stock Analysis Report
 
HCI Group, Inc. (HCI) : Free Stock Analysis Report
 
The Progressive Corporation (PGR) : Free Stock Analysis Report
 
To read this article on Zacks.com click here.
 
Zacks Investment Research