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Intact Financial Corporation (TSX:IFC), Canada’s leading provider of property and casualty insurance, announced its fourth-quarter earnings results and a dividend increase after the market closed yesterday, and its stock has responded by falling over 2% in early trading today. Let’s break down the quarterly results, the dividend increase, and the fundamentals of its stock to determine if we should consider using this weakness as a long-term buying opportunity.

A very strong quarterly performance

Here’s a breakdown of 10 of the most notable financial statistics from Intact’s three-month period ended December 31, 2017, compared with the same period in 2016:

Metric	Q4 2017	Q4 2016	Change
Direct premiums written	$2,294 million	$1,961 million	17.0%
Underwriting income	$178 million	$153 million	16.3%
Net investment income	$121 million	$104 million	16.3%
Net distribution income	$28 million	$24 million	16.7%
Net operating income	$236 million	$212 million	11.3%
Net income	$232 million	$171 million	35.7%
Net operating income per share	$1.63	$1.58	3.2%
Earnings per share	$1.60	$1.27	26.0%
Book value per share	$48.00	$42.72	12.4%
Operating return on equity for last 12 months	12.9%	12.0%	90 basis points

Dividend hike? Yes, please!  

In the press release, Intact also announced a 9.4% increase to its quarterly dividend to $0.70 per share, and the first payment at this increased rate is payable on March 29 to shareholders of record on March 15.

What should you do with Intact’s stock now?

It was a fantastic quarter overall for Intact, bolstered by its acquisition of OneBeacon Insurance Group in the third quarter of 2017, and it capped off a very strong year for the company, in which its net operating income increased 14.8% to $5.60 per share and its earnings per share increased 44.8% to $5.75 per share. With these results and its dividend increase in mind, I think the market should have responded by sending its stock soaring, and I think the weakness represents a buying opportunity for two fundamental reasons.

First, it’s undervalued. Intact’s stock now trades for just 17 times fiscal 2017’s EPS of $5.75 and only 14.1 times the consensus analyst estimate of $6.94 for fiscal 2018, both of which are very inexpensive given its current earnings-growth rate and its estimated 17.3% long-term earnings-growth rate; these multiples are also inexpensive compared with its five-year average multiple of 18.8.

Second, it has a great dividend. Intact now pays an annual dividend of $2.80 per share, which gives its stock a solid 2.9% yield. It’s also very important to note that the insurance giant has raised its annual dividend payment each of the last 12 years, and the hike it just announced has it on pace for 2018 to mark the 13th consecutive year with an increase, making it one of the best dividend-growth stocks in the industry.

With all of the information provided above in mind, I think all Foolish investors should strongly consider using the post-earnings weakness in Intact Financial as a long-term buying opportunity.

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Fool contributor Joseph Solitro has no position in any stocks mentioned. Intact Financial is a recommendation of Stock Advisor Canada.

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