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Why You Should Offload Markel (MKL) Stock from Portfolio
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Shares of Markel Corporation (MKL - Free Report) underperformed the Zacks categorized Property and Casualty Insurance industry in the last three months. While Markel shares lost 2.45%, the industry gained 10.71 %. The company also witnessed sharp decline in 2017 estimates, which declined 4.7% in the last 60 days. The stock currently carries Zacks Rank #5 (Strong Sell).
As a property and casualty (P&C) insurer Markel is exposed to catastrophes losses, which leads to volatility in underwriting results. The fourth quarter experienced catastrophe activity – Hurricane Mathew and earthquake in New Zealand. These are likely to weigh on the underwriting profitability of the company.
Markel has been witnessing an increase in expenses. This, in turn, has been affecting operating margins. Hence, the company should strive to ensure that the increase in total revenue outpaces the rise in expenses. Otherwise, the company’s operating margin is likely to suffer.
The valuation also remains expensive at the current level. The P/E ratio is 31.5%, a premium of 24% to the industry average. Return on equity of 6.3% is lower than the industry average of 7.0%. Also, the price earnings growth ratio, which determines the relative trade-off between the price of a stock, the earnings generated per share, and the company's expected growth, is 2.87. This is higher than the industry average of 0.32.
The Zacks Consensus Estimate for the fourth quarter is currently pegged at $4.91, translating to a year-over-year decline of 65%. Our proven model does not conclusively show that the company is likely to beat on earnings in the to-be-reported quarter. This is because the company has an Earnings ESP of 0.00% makes prediction difficult. As it is, we caution against Sell-rated stocks (Zacks Rank #4 and 5) going into an earnings announcement, especially if the company has seen negative estimate revisions.Notably, the insurer has missed expectations in the last two quarters.
Arch Capital offers property, casualty, and mortgage insurance and reinsurance products worldwide. It delivered positive surprises in all of the last four quarters with an average beat of 9.27%.
Everest Re, which writes P&C, reinsurance and insurance in the U.S, Bermuda and international markets, delivered positive surprises in three of the last four quarters with an average beat of 25.64%.
OneBeacon Insurance, a provider of specialty P&C insurance products and services, delivered positive surprises in three of the last four quarters with an average beat of 35.82%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017? Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>
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Why You Should Offload Markel (MKL) Stock from Portfolio
Shares of Markel Corporation (MKL - Free Report) underperformed the Zacks categorized Property and Casualty Insurance industry in the last three months. While Markel shares lost 2.45%, the industry gained 10.71 %. The company also witnessed sharp decline in 2017 estimates, which declined 4.7% in the last 60 days. The stock currently carries Zacks Rank #5 (Strong Sell).
As a property and casualty (P&C) insurer Markel is exposed to catastrophes losses, which leads to volatility in underwriting results. The fourth quarter experienced catastrophe activity – Hurricane Mathew and earthquake in New Zealand. These are likely to weigh on the underwriting profitability of the company.
Markel has been witnessing an increase in expenses. This, in turn, has been affecting operating margins. Hence, the company should strive to ensure that the increase in total revenue outpaces the rise in expenses. Otherwise, the company’s operating margin is likely to suffer.
The valuation also remains expensive at the current level. The P/E ratio is 31.5%, a premium of 24% to the industry average. Return on equity of 6.3% is lower than the industry average of 7.0%. Also, the price earnings growth ratio, which determines the relative trade-off between the price of a stock, the earnings generated per share, and the company's expected growth, is 2.87. This is higher than the industry average of 0.32.
The Zacks Consensus Estimate for the fourth quarter is currently pegged at $4.91, translating to a year-over-year decline of 65%. Our proven model does not conclusively show that the company is likely to beat on earnings in the to-be-reported quarter. This is because the company has an Earnings ESP of 0.00% makes prediction difficult. As it is, we caution against Sell-rated stocks (Zacks Rank #4 and 5) going into an earnings announcement, especially if the company has seen negative estimate revisions.Notably, the insurer has missed expectations in the last two quarters.
Stocks to Consider
Some better-ranked property and casualty insurers are Arch Capital Group Ltd. (ACGL - Free Report) , Everest Re Group Limited and OneBeacon Insurance Group, Ltd. (OB - Free Report) . All these stocks sport a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arch Capital offers property, casualty, and mortgage insurance and reinsurance products worldwide. It delivered positive surprises in all of the last four quarters with an average beat of 9.27%.
Everest Re, which writes P&C, reinsurance and insurance in the U.S, Bermuda and international markets, delivered positive surprises in three of the last four quarters with an average beat of 25.64%.
OneBeacon Insurance, a provider of specialty P&C insurance products and services, delivered positive surprises in three of the last four quarters with an average beat of 35.82%.
Zacks' Top 10 Stocks for 2017
In addition to the stocks discussed above, would you like to know about our 10 finest buy-and-hold tickers for the entirety of 2017? Who wouldn't? As of early December, the 2016 Top 10 produced 5 double-digit winners including oil and natural gas giant Pioneer Natural Resources which racked up a stellar +50% gain. The new list is painstakingly hand-picked from 4,400 companies covered by the Zacks Rank. Be among the very first to see it>>