Business Profile, And Business Growth
Atlantic American Corp (AAME) sells shares at $5.1899 in the Nasdaq Global Market. The company is an insurance holding company, which engages in the life, health, and property, and casualty insurance industries.
Atlantic American Corp shows sales growth of 5%, which is not very significant. However, AAME grows, which is always favorable. In addition, operating income is another positive feature of AAME. The company’s operating income grows at 62% y/y.
Regarding the share count, I appreciate that the shares outstanding decreased a -31%. In sum, the intrinsic valuation of each share increased.
With an asset/liability ratio of more than 1x, AAME’s balance sheet looks stable. AAME’s short-term debt is less significant than the cash in hand. I feel that Atlantic American Corp may not have to worry about any liquidity risk. In addition, the price to book value is below 1.5x, which means that AAME is undervalued. Atlantic American Corp has $384 million in total assets and $256 million in total liabilities.
AAME sells at less than 1x forward sales
In Q3, AAME reported quarterly sales of $46 million. AAME also showed a positive net income of $1.876 million. The numbers seem very beneficial.
Atlantic American Corp has a market capitalization of $105 million. The enterprise value is equal to $65 million. With forward sales of $277 million, AAME sells at less than 1x forward sales. In my experience, market participants will most likely believe that the company is cheap.
Disclosure: We have no AAME shares.
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