Tower Group Inc. Third Quarter Earnings Sneak Peek

Tower Group, Inc. (NASDAQ:TWGP) will unveil its latest earnings on Monday, November 7, 2011. Tower Group, through its subsidiaries, offers property and casualty insurance products and insurance services and products.

Tower Group, Inc. Earnings Preview Cheat Sheet

Wall St. Earnings Expectations: The average estimate of analysts is for net loss of 17 cents per share, a swing from net income of 77 cents in the year earlier quarter. During the past three months, the average estimate has moved down from 75 cents. Between one and three months ago, the average estimate moved down. It also has dropped from 73 cents during the last month. Analysts are projecting profit to rise by 32.5% versus last year to $1.72.

Past Earnings Performance: The company has beaten estimates the last four quarters and is coming off a quarter where it topped forecasts by 3 cents, reporting profit of 63 cents per share against a mean estimate of net income of 60 cents per share.

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Wall St. Revenue Expectations: On average, analysts predict $388.4 million in revenue this quarter, a rise of 2.5% from the year ago quarter. Analysts are forecasting total revenue of $1.56 billion for the year, a rise of 20.9% from last year’s revenue of $1.29 billion.

Analyst Ratings: Analysts seem relatively indifferent about Tower Group with four of six analysts surveyed maintaining a hold rating.

A Look Back: In the second quarter, profit fell 14.6% to $24.1 million (58 cents a share) from $28.3 million (63 cents a share) the year earlier, but exceeded analyst expectations. Revenue rose 39.9% to $436.3 million from $311.8 million.

Key Stats:

The company has enjoyed double-digit year-over-year percentage revenue growth for the past four quarters. Over that span, the company has averaged growth of 50.4%, with the biggest boost coming in the third quarter of the last fiscal year when revenue rose 65.3% from the year earlier quarter.

The decrease in profit in the second quarter broke a streak of three consecutive quarters of year-over-year profit increases. Net income rose 47% in the first quarter, 25.3% in the fourth quarter of the last fiscal year and 12.4% in the third quarter of the last fiscal year.

Competitors to Watch: The Travelers Companies, Inc. (NYSE:TRV), W.R. Berkley Corporation (NYSE:WRB), The Progressive Corp. (NYSE:PGR), Markel Corporation (NYSE:MKL), American Financial Group (NYSE:AFG), RLI Corp. (NYSE:RLI), Harleysville Group Inc. (NASDAQ:HGIC), The Hanover Insurance Group, Inc. (NYSE:THG), and Selective Insurance Group (NASDAQ:SIGI).

Stock Price Performance: During August 8, 2011 to November 1, 2011, the stock price had risen $3.04 (15.3%) from $19.90 to $22.94. It saw one of its worst periods between September 15, 2011 and September 21, 2011 when shares fell for five-straight days, falling 6% (-$1.39) over that span. The stock price saw one of its best stretches over the last year between June 23, 2011 and July 1, 2011 when shares rose for seven-straight days, rising 3.4% (+78 cents) over that span. Shares are down $2.12 (-8.5%) year to date.

(Source: Xignite Financials)

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