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Why is Hold Strategy Perfect for XL Capital (XL) Stock Now?
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XL Group Limited remains well positioned to grow at the heels of growth strategies, sensible acquisitions and a robust capital position. The Zacks Rank #3 (Hold) property and casualty insurer possesses immense potential, driven by a slew of good growth drivers.
Growth Projections: The Zacks Consensus Estimate for earnings per share is $3.26 for 2017 and $3.94 for 2018. These reflect nearly 100% year-over-year increase for 2017 and 21% for 2018. Revenues for both 2017 and 2018 are expected to inch up about 1.6% and 3.4%, respectively.
The expected long-term earnings growth is pegged at 9%.
Northbound Estimates: The Zacks Consensus Estimate for 2017 has nudged up 1.2% over the last 60 days.
Price Performance: Shares of XL Group have rallied 15.8% in a year, underperforming the industry’s increase of 22.6%. However, the shares have slightly outperformed the S&P 500’s gain of 15.1% over the same time frame.
Positive Earnings Surprise History: XL Group has surpassed the Zacks Consensus Estimate in the last five quarters with an average beat of 24.09%.
Shares Underpriced: Looking at the company’s price-to-book ratio — the best multiple for valuing insurers owing to large variations in their earnings results from quarter to quarter — shares are underpriced at present. The company has a trailing 12-month P/B ratio of 0.8, substantially lagging the industry average of 1.5. Undervalued shares with growth prospects are the best investment bets. XL Group also carries a Value Score of B.
VGM Score: XL Group carries a 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.
Growth Drivers in Place
Post the acquisition of Catlin Group in May 2015, XL Group enjoys a competitive edge with increased scale and efficiencies. While the buyout will help the insurer achieve its expense synergy target of minimum $300 million, it expects integration costs to lower in 2017.
The company’s focus on tapping into opportunities in the growing economies pushes it to expand geographical footprint, add capabilities and diversify product and service portfolio, in turn ensuring a steady revenue generation.
XL Group targets those lines that provide the best return on capital over the pricing cycle. The company is deploying capital in businesses with lower loss ratios, thus resulting in margin expansion.
A strong capital position aids the company to return value to the shareholders through regular dividend hikes and buybacks. XL Group targets no less than $700 million in share buybacks for 2017, of which, it already had repurchased about $451 million in the first half. The company had worth $650 million remaining under its authorization as of Jun 30. Also, its dividend yield of 2.2% betters the industry average of 0.5%. Together these pointers make it a lucrative choice for yield-seeking investors.
Atlas Financial Holdings engages in underwriting commercial automobile insurance policies in the United States. The company delivered positive surprises in two of the last four quarters with an average beat of 57.94%
Markel Corporation markets and underwrites specialty insurance products in the United States and internationally. The company delivered positive surprises in two of the last four quarters with an average beat of 21.06%.
Mercury General Corporation engages in writing personal automobile insurance in the United States. The company delivered positive surprises in three of the trailing four quarters with an average beat of 1.06%.
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If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course. Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure.
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Why is Hold Strategy Perfect for XL Capital (XL) Stock Now?
XL Group Limited remains well positioned to grow at the heels of growth strategies, sensible acquisitions and a robust capital position. The Zacks Rank #3 (Hold) property and casualty insurer possesses immense potential, driven by a slew of good growth drivers.
Growth Projections: The Zacks Consensus Estimate for earnings per share is $3.26 for 2017 and $3.94 for 2018. These reflect nearly 100% year-over-year increase for 2017 and 21% for 2018. Revenues for both 2017 and 2018 are expected to inch up about 1.6% and 3.4%, respectively.
The expected long-term earnings growth is pegged at 9%.
Northbound Estimates: The Zacks Consensus Estimate for 2017 has nudged up 1.2% over the last 60 days.
Price Performance: Shares of XL Group have rallied 15.8% in a year, underperforming the industry’s increase of 22.6%. However, the shares have slightly outperformed the S&P 500’s gain of 15.1% over the same time frame.
Positive Earnings Surprise History: XL Group has surpassed the Zacks Consensus Estimate in the last five quarters with an average beat of 24.09%.
Shares Underpriced: Looking at the company’s price-to-book ratio — the best multiple for valuing insurers owing to large variations in their earnings results from quarter to quarter — shares are underpriced at present. The company has a trailing 12-month P/B ratio of 0.8, substantially lagging the industry average of 1.5. Undervalued shares with growth prospects are the best investment bets. XL Group also carries a Value Score of B.
VGM Score: XL Group carries a 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.
Growth Drivers in Place
Post the acquisition of Catlin Group in May 2015, XL Group enjoys a competitive edge with increased scale and efficiencies. While the buyout will help the insurer achieve its expense synergy target of minimum $300 million, it expects integration costs to lower in 2017.
The company’s focus on tapping into opportunities in the growing economies pushes it to expand geographical footprint, add capabilities and diversify product and service portfolio, in turn ensuring a steady revenue generation.
XL Group targets those lines that provide the best return on capital over the pricing cycle. The company is deploying capital in businesses with lower loss ratios, thus resulting in margin expansion.
A strong capital position aids the company to return value to the shareholders through regular dividend hikes and buybacks. XL Group targets no less than $700 million in share buybacks for 2017, of which, it already had repurchased about $451 million in the first half. The company had worth $650 million remaining under its authorization as of Jun 30. Also, its dividend yield of 2.2% betters the industry average of 0.5%. Together these pointers make it a lucrative choice for yield-seeking investors.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Atlas Financial Holdings, Inc. , Markel Corporation (MKL - Free Report) and Mercury General Corporation (MCY - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Atlas Financial Holdings engages in underwriting commercial automobile insurance policies in the United States. The company delivered positive surprises in two of the last four quarters with an average beat of 57.94%
Markel Corporation markets and underwrites specialty insurance products in the United States and internationally. The company delivered positive surprises in two of the last four quarters with an average beat of 21.06%.
Mercury General Corporation engages in writing personal automobile insurance in the United States. The company delivered positive surprises in three of the trailing four quarters with an average beat of 1.06%.
5 Trades Could Profit "Big-League" from Trump Policies
If the stocks above spark your interest, wait until you look into companies primed to make substantial gains from Washington's changing course. Today Zacks reveals 5 tickers that could benefit from new trends like streamlined drug approvals, tariffs, lower taxes, higher interest rates, and spending surges in defense and infrastructure.
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