Kemper's Self-Improvement Plan Is Generating Strong Results

I liked Kemper (KMPR) earlier this year and saw strong potential as the company continued its turnaround efforts and moved toward the completion of its acquisition of Infinity, but I frankly underestimated the scope of near-term growth and underwriting improvement potential for the company’s core non-standard auto insurance business. And so while I liked the stock back in April, I wasn’t counting on a 33% move in the stock in such a relatively short time – then again, neither was the Street, and analysts have been moving their estimates higher pretty steadily.

Although I do think Kemper shares are a little pricey now on a core discounted earnings basis, a mid-teens P/E (in line with post-merger EPS growth prospects) to 2019 earnings can support a fair value in the $80’s and I wouldn’t be quick to assume that Kemper doesn’t have a few more beat-and-raise quarters up its sleeve. Higher cat losses remain a risk and the company has work to do in areas like commercial auto, but this is still a pretty interesting growth insurance stock.

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Kemper's Self-Improvement Plan Is Generating Strong Results