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Is This the Right Time to Offload Markel Corp (MKL) Stock?
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Shares of Markel Corporation (MKL - Free Report) gained 1.31% in the last one year, significantly underperforming the Zacks categorized Property and Casualty Insurance industry’s increase of 14.47%. Also, the company witnessed full-year 2017 and 2018 estimates moving south by nearly 12.3% and 0.4%, respectively, over the last 60 days.
Exposure to catastrophe losses remains a concern for the property and casualty (P&C) insurer as this lends volatility to earnings. Moreover, the company’s underwriting results are negatively impacted by such losses, affecting combined ratios.
Also, the company saw the Ogden rate decline from a positive 2.5% to a negative 0.75%. The rate change had an impact on the U.K. auto casualty exposures through reinsurance contracts at the Reinsurance segment. The reduction in the Ogden rate increased the anticipated claims payments on the aforementioned exposures, which resulted in higher loss reserves.
Markel Corp. has been witnessing escalating expenses over a considerable period of time. nearly doubling in six years. Given that the rise in expenses is limiting margin expansion, the company should make efforts to ensure that the increase in total revenue outpaces the rise in expenses.
Further, the Markel Corp.’s stock seems to be overvalued. This is because the stock is trading at 1.6 price to book multiple over a period of one year, which compares unfavorably with the P&C industry’s multiple of 1.4. Return on equity of 4.1% is also lower than the industry average of 6.5%.
Some better-ranked stocks from the same space include CNA Financial Corporation (CNA - Free Report) , Infinity Property and Casualty Corporation and ProAssurance Corporation (PRA - Free Report) . Each of these stocks holds a Zacks Rank #2 (Buy).
CNA Financial offers commercial P&C insurance products, primarily in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 12.45%.
Infinity Property and Casualty provides personal automobile insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 37.45%.
ProAssurance Corporation offers P&C insurance, and reinsurance products in the United States. The company delivered positive surprises in all of the last four quarters with an average beat of 16.59%.
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Is This the Right Time to Offload Markel Corp (MKL) Stock?
Shares of Markel Corporation (MKL - Free Report) gained 1.31% in the last one year, significantly underperforming the Zacks categorized Property and Casualty Insurance industry’s increase of 14.47%. Also, the company witnessed full-year 2017 and 2018 estimates moving south by nearly 12.3% and 0.4%, respectively, over the last 60 days.
Exposure to catastrophe losses remains a concern for the property and casualty (P&C) insurer as this lends volatility to earnings. Moreover, the company’s underwriting results are negatively impacted by such losses, affecting combined ratios.
Also, the company saw the Ogden rate decline from a positive 2.5% to a negative 0.75%. The rate change had an impact on the U.K. auto casualty exposures through reinsurance contracts at the Reinsurance segment. The reduction in the Ogden rate increased the anticipated claims payments on the aforementioned exposures, which resulted in higher loss reserves.
Markel Corp. has been witnessing escalating expenses over a considerable period of time. nearly doubling in six years. Given that the rise in expenses is limiting margin expansion, the company should make efforts to ensure that the increase in total revenue outpaces the rise in expenses.
Further, the Markel Corp.’s stock seems to be overvalued. This is because the stock is trading at 1.6 price to book multiple over a period of one year, which compares unfavorably with the P&C industry’s multiple of 1.4. Return on equity of 4.1% is also lower than the industry average of 6.5%.
Zacks Rank
Currently, Markel Corp. carries a Zacks Rank #5 (Strong Sell). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks to Consider
Some better-ranked stocks from the same space include CNA Financial Corporation (CNA - Free Report) , Infinity Property and Casualty Corporation and ProAssurance Corporation (PRA - Free Report) . Each of these stocks holds a Zacks Rank #2 (Buy).
CNA Financial offers commercial P&C insurance products, primarily in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 12.45%.
Infinity Property and Casualty provides personal automobile insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 37.45%.
ProAssurance Corporation offers P&C insurance, and reinsurance products in the United States. The company delivered positive surprises in all of the last four quarters with an average beat of 16.59%.
Looking for Stocks with Skyrocketing Upside?
Zacks has just released a Special Report on the booming investment opportunities of legal marijuana.
Ignited by new referendums and legislation, this industry is expected to blast from an already robust $6.7 billion to $20.2 billion in 2021. Early investors stand to make a killing, but you have to be ready to act and know just where to look. See the pot trades we're targeting>>