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AXIS Capital's (AXS) Prospects Look Bright: Time to Buy?
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Shares of AXIS Capital Holdings Limited (AXS - Free Report) gained 25.83% in the last one year, outperforming the Zacks categorized Property and Casualty insurance industry’s growth of 23.37%. We expect the stock to retain its momentum, based on a number of positives such as increasing premiums, improving fee income and robust capital position.
New business opportunities across AXIS Capital’s lines of business and geography have been driving higher premium writings. The property and casualty (P&C) insurer has also been improving its portfolio mix and underwriting profitability, apart from strengthening the casualty and professional lines in the insurance segment, particularly motor and reinsurance.
In addition, the Zacks Rank #2 (Buy) P&C insurer remains optimistic about fee income growth, which is a steady and increasing source of attractive revenues for the company.
Further, AXIS Capital continues to boost its shareholder value through stock buybacks and dividend hikes. During 2016, the company paid $644 million to shareholders, or 157% of its year-to-date operating income through dividends and share repurchases, reducing share count by 11%.
We expect that a solid cash position, retained earnings as well as solid bottom line growth — attributable to better segmental performances — will continue to support AXIS Capital’s buyback activities and dividend payouts. Going forward, the company intends to pay back at least 100% of annual operating earnings to investors through common dividends and share repurchases, unless it finds other means of capital deployment.
Currently, AXIS Capital seems to be undervalued, as the stock is trading at 1.18x price to book multiple over a period of one year. This compares favorably with the P&C industry’s multiple of 1.40x. Also, AXIS Capital has a trailing 12-month return on equity (ROE) of 8.4%, which is higher than the industry average of 6.6%. Furthermore, the company’s expected long-term earnings growth is pegged at 8.50%.
Other Stocks to Consider
Investors interested in other stocks from the same space include American Financial Group, Inc. (AFG - Free Report) , Argo Group International Holdings, Ltd. and The Progressive Corp. (PGR - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
American Financial offers P&C insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 6.45%.
Argo Group International Holdings underwrites specialty insurance and reinsurance products in the property and casualty market worldwide. The company delivered positive surprises in all of the last four quarters with an average beat of 36.54%.
The Progressive Corporation offers personal and commercial property-casualty insurance, and other specialty property-casualty insurance and related services primarily in the United States. The company delivered a positive surprise in two of the last four quarters with an average beat of 1.32%.
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AXIS Capital's (AXS) Prospects Look Bright: Time to Buy?
Shares of AXIS Capital Holdings Limited (AXS - Free Report) gained 25.83% in the last one year, outperforming the Zacks categorized Property and Casualty insurance industry’s growth of 23.37%. We expect the stock to retain its momentum, based on a number of positives such as increasing premiums, improving fee income and robust capital position.
New business opportunities across AXIS Capital’s lines of business and geography have been driving higher premium writings. The property and casualty (P&C) insurer has also been improving its portfolio mix and underwriting profitability, apart from strengthening the casualty and professional lines in the insurance segment, particularly motor and reinsurance.
In addition, the Zacks Rank #2 (Buy) P&C insurer remains optimistic about fee income growth, which is a steady and increasing source of attractive revenues for the company.
Further, AXIS Capital continues to boost its shareholder value through stock buybacks and dividend hikes. During 2016, the company paid $644 million to shareholders, or 157% of its year-to-date operating income through dividends and share repurchases, reducing share count by 11%.
We expect that a solid cash position, retained earnings as well as solid bottom line growth — attributable to better segmental performances — will continue to support AXIS Capital’s buyback activities and dividend payouts. Going forward, the company intends to pay back at least 100% of annual operating earnings to investors through common dividends and share repurchases, unless it finds other means of capital deployment.
Currently, AXIS Capital seems to be undervalued, as the stock is trading at 1.18x price to book multiple over a period of one year. This compares favorably with the P&C industry’s multiple of 1.40x. Also, AXIS Capital has a trailing 12-month return on equity (ROE) of 8.4%, which is higher than the industry average of 6.6%. Furthermore, the company’s expected long-term earnings growth is pegged at 8.50%.
Other Stocks to Consider
Investors interested in other stocks from the same space include American Financial Group, Inc. (AFG - Free Report) , Argo Group International Holdings, Ltd. and The Progressive Corp. (PGR - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
American Financial offers P&C insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 6.45%.
Argo Group International Holdings underwrites specialty insurance and reinsurance products in the property and casualty market worldwide. The company delivered positive surprises in all of the last four quarters with an average beat of 36.54%.
The Progressive Corporation offers personal and commercial property-casualty insurance, and other specialty property-casualty insurance and related services primarily in the United States. The company delivered a positive surprise in two of the last four quarters with an average beat of 1.32%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research. It's not the one you think. See This Ticker Free >>