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Why Universal Insurance Holdings Stock Soared by 22% on Friday

A stomping net income beat on its latest set of quarterly results drove Universal Insurance Holdings(UVE 22.40%) share price up at a comfortable, double-digit percentage rate on Friday. The stock closed more than 22% higher, leaving the basically stagnant S&P 500 index in the dust.

Crushed it on the bottom line

Following market close on Thursday, Universal Insurance published its fourth-quarter and full-year 2023 numbers. These revealed that the company boosted its total revenue by almost 14% year over year to more than $375 million. This, despite the fact that direct premiums written crept up by a comparatively modest 4% to total nearly $433 million.

Going in the other direction, Universal Insurance’s non-GAAP (adjusted) net income fell, and steeply. It was down by nearly 43% to $12.6 million, or $0.43 per share.

The analysts tracking the insurer’s stock were well off the mark with their collective estimates. On average, they were looking for almost $429 million on the top line but were projecting a net loss of $0.16.

In its earnings release, Universal Insurance attributed the revenue improvement to that growth in both direct premiums written and net investment income. The latter was $13.7 million, which bettered the year-ago result by nearly 32%.

Share buybacks and dividend payouts

Universal Insurance also updated the public about its capital deployment activities during the quarter. In the period, under its stock buyback program it purchased roughly 223,000 of its own shares at a total cost of $3.6 million. There’s still plenty of gas left in that tank, with $4.1 million in authorization remaining. For payouts, earlier this month the company declared its latest quarterly dividend — $0.16 per share, which yields slightly over 3%.

Eric Volkman has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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