SA News • Thu, Nov. 6
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Crawford & Company: Making The Most Of Natural Disasters
- Crawford & Company has realized extraordinary profits from providing outsourced insurance-related services for catastrophe response to Superstorm Sandy, The Japanese Earthquake and Tsunami and the BP Oil Spill.
- Recent lack of natural and man-made global disasters has made for difficult revenue and earnings comparisons, contributing to current 45% undervaluation of the stock, and potential 100% upside in 2014.
- The reduction in revenue for catastrophe response services disguises the fact that other Crawford operations, such as medical management and worker's compensation administration, are growing at double-digit rates.
- Crawford pays a 2.45% dividend yield, sells at a forward PE of 9.6 and generates strong cash flow for stock repurchases. It provides exposure to the climate change macro factor.
- The probability of future natural disasters are not factored into the current stock price, and a catastrophic insurance event could provide a sudden boost to Crawford earnings and visibility.
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