Thoughts on TSU earnings report yesterday and are you feeling more positive than a few weeks ago when you called it a pass?
Ok thanks!
TSU reported EPS of $0.79 beating estimates of $0.625 and sales of $794.16M missing estimates of $822.12M. TSU reported its highest ever annual operating net income of $135.8M, driven by strong underwriting and high net investment income. Its operating ROE was strong at 19.4%, sales growth was 5.2%, driven by strength in its primary lines (surety, corporate insurance, and warranty). It did not report any loss from its run-off program in the quarter, unlike the same quarter in the prior year. Its sales growth has been slowing, but operational efficiency is bouncing back. It generates solid free cash flows, and its valuation is reasonable at 12X forward earnings and a 2.2X book. We are somewhat reassured by these results, operationally, but we would like to see growth accelerate. Price-wise, we would like to see it move to the $40 range and hold those levels before becoming more comfortable.