Homeowners Choice is a Strong Buy with Special Dividend

Homeowners Choice, Inc. (HCII) announced that its board of directors has declared a regular quarterly cash dividend on its common shares in the amount of $0.225 per share, which represents a 12.5% increase over the previous quarterly rate of $0.20 per share.  Homeowners Choice has a current dividend yield of 3.74%.

In addition, the board declared a special dividend of $0.10 per common share.  Both the regular quarterly dividend and the special dividend will be paid Dec. 21, 2012 to shareholders of record on the close of business Nov. 16, 2012.

Homeowners Choice, a leading provider of homeowners’ insurance, today announced that it will transfer the listing of its common stock from the NASDAQ Global Select Market to the New York Stock Exchange. The company expects its shares to begin trading on the New York Stock Exchange on Oct. 25, 2012, under the new ticker symbol “HCI.” Until the transfer is complete, the company’s common shares will continue to trade under the ticker symbol “HCII” on the NASDAQ Global Select Market.

Better-than-expected second-quarter earnings, growth in revenues and strong credit quality are the primary rank drivers for this stock.

Homeowners Choice reported its second-quarter results on August 1 with earnings per share of 74 cents, beating the Zacks Consensus Estimate of 60 cents by 23.3% and year-ago earnings of 30 cents by 146.7%. Strong results for the quarter were primarily aided by substantially higher net premiums earned. However, slightly lower net investment income and higher expenses were the downsides.

Net premiums earned increased 112.8% to $36.3 million from $17.0 million in the year-ago quarter.

The Zacks Consensus Estimate for 2012 increased 8.8% to $2.46 per share based on two out of three upward estimate revisions over the last 30 days. The current estimate implies year-over-year growth of 101.4%.

For 2013, two out of three estimates was revised higher over the same time frame, lifting the Zacks Consensus Estimate by 23.1% to $2.45 per share.

Homeowners Choice has an equity summary score of 9.7 out of 10 for a VERY Bullish outlook.