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Why You Should Add W.R. Berkley (WRB) Stock to Your Portfolio

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W.R. Berkley’s (WRB - Free Report) solid insurance business, strong international business and sturdy financial position along with favorable growth estimates make it a good investment choice.

Zacks Rank & Price Performance

W.R. Berkley currently carries a Zacks Rank #2 (Buy). In the past month, the stock has gained 3.8%, outperforming the industry’s increase of 1.7%.

Growth Projections

The Zacks Consensus Estimate for 2021 earnings is pegged at $3.41, up 57.6% on 10.7% higher revenues of $8.7 billion. The long-term earnings growth rate is currently pegged at 9%, better than the industry average of 8.6%.

Return on Equity (ROE)

The company’s ROE for the trailing 12 months is 6.9%, comparing favorably with the industry’s 5.6%, reflecting the company’s efficiency in utilizing shareholders’ fund.  The company targets 15% ROE over the long term.

Estimate Revision

The Zacks Consensus Estimate for 2021 moved 1.2% north in the past seven days, reflecting analyst optimism.

Style Score

The company is well poised for progress, as is evident from its favorable VGM Score of B. Here V stands for Value, G for Growth and M for Momentum, with the score being a weighted combination of all three factors. Back-tested results have shown that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2 are the best investment options.

Business Tailwinds

The company primarily focuses on commercial lines including excess and surplus lines, admitted lines and specialty personal lines.

Several new startup units in varied business lines, expansion of international business that offers diversification benefits, rate increase, benefits derived from market dislocations, and high retention should drive the Insurance business.

Premium growth in the international unit is mainly supported by the emerging markets of the United Kingdom, Continental Europe, South America, Canada, Scandinavia, Asia and Australia.

Strong Capital Position

W.R. Berkley maintains a solid balance sheet with sufficient liquidity and strong cash flows. Banking on its stable cash flow, W.R. Berkley has raised dividends for 15 times since 2005 and paid 11 special dividends since 2012.  Its current dividend yield of 0.7% is better than the industry average of 0.4%, which makes the stock an attractive pick for yield-seeking investors.

Other Stocks to Consider

Investors interested in the same space can look at Fidelity National Financial (FNF - Free Report) , NMI Holdings (NMIH - Free Report) and The Allstate Corporation (ALL - Free Report) .  

Fidelity National delivered an earnings surprise of 18.40% in the last reported quarter. It sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank.

NMI Holdings delivered an earnings surprise of 27.03% in the last reported quarter. It carries a Zacks Rank #2.

Allstate delivered an earnings surprise of 66.10% in the last reported quarter. It carries a Zacks Rank #2

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