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RLI Down 4.2% Since Earnings Report: Can It Rebound?
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It has been about a month since the last earnings report for RLI Corp. (RLI - Free Report) . Shares have lost about 4.2% in that time frame, outperforming the market.
Will the recent negative trend continue leading up to its next earnings release, or is RLI due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
RLI Q4 Earnings and Revenues Surpass, Premiums Increase
RLI’s fourth-quarter 2017 operating earnings of 51 cents per share surpassed the Zacks Consensus Estimate by 6.3%. However, the bottom line deteriorated 8.9% year over year.
Lower underwriting income and higher expenses were primarily responsible for the downside. Nonetheless, the company witnessed a strong performance at its property and casualty segments.
Net income soared 79.2% year over year to $1.29 per share.
Full-Year Highlights
For 2017, RLI Corp. reported operating earnings per share of $1.60, beating the Zacks Consensus Estimate by 2.6% but declined 23.1% year over year.
Total revenues of $792.8 million rose 1.4% year over year.
Operational Performance
Operating revenues for the quarter totaled $202.7 million, up 0.9% year over year owing to higher net premiums earned as well as net investment income. Also, the top line outpaced the Zacks Consensus Estimate of $198 million by 2.4%.
Gross premiums written improved 11% year over year to $229.1 million on the back of a solid performance by the Property and Surety segments.
Total expenses increased 6% year over year to $184.7 million due to higher loss and settlement expenses, policy acquisition costs, insurance operating expenses plus general corporate expenses.
The company reported underwriting income of $26.8 million, which plunged 64.8% year over year. Combined ratio deteriorated 690 basis points year over year to 96.4%. Nonetheless, the company has been able to deliver underwriting profits for the last 21 straight years.
The property and casualty (P&C) insurer’s net investment income improved nearly 9.8% year over year to $14.4 million. Total return from the investment portfolio was 1.4% while the bond portfolio returned 0.4%. The equity portfolio yielded 5.7%.
Financial Update
The company exited the fourth quarter with total investments and cash of $2.1 billion, up 5.9% from the year-end 2016.
Book value was $19.33 per share as of Dec 31, 2017, up 3.1% from Dec 31, 2016.
Long-term debt was $148.9 million, reflecting a 0.1% rise from the 2016-end level.
Statutory surplus nudged up 0.5% year over year to $864.6 million.
Net cash flow from operations inched up 0.3% to $51.6 million in the quarter.
Dividend Payout
On Dec 27, 2017, the company paid out a cash dividend of 21 cents per share for an aggregate amount of $86.5 million. In the last 10 years, the average annual growth rate of the P&C insurer’s quarterly dividend came up to 6.2%.
Interestingly, on the aforementioned date, the company paid a special cash dividend of $1.75 per share, resulting in a tax benefit of $1.9 million (4 cents per share).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter. In the past month, the consensus estimate has shifted by 19.1% due to these changes.
At this time, RLI has a subpar Growth Score of D, however its Momentum is doing a lot better with a B. The stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum investors based on our style scores.
Outlook
Estimates have been trending upward for the stock and the magnitude of this revision looks promising. It comes with little surprise that RLI has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.
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RLI Down 4.2% Since Earnings Report: Can It Rebound?
It has been about a month since the last earnings report for RLI Corp. (RLI - Free Report) . Shares have lost about 4.2% in that time frame, outperforming the market.
Will the recent negative trend continue leading up to its next earnings release, or is RLI due for a breakout? Before we dive into how investors and analysts have reacted of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
RLI Q4 Earnings and Revenues Surpass, Premiums Increase
RLI’s fourth-quarter 2017 operating earnings of 51 cents per share surpassed the Zacks Consensus Estimate by 6.3%. However, the bottom line deteriorated 8.9% year over year.
Lower underwriting income and higher expenses were primarily responsible for the downside. Nonetheless, the company witnessed a strong performance at its property and casualty segments.
Net income soared 79.2% year over year to $1.29 per share.
Full-Year Highlights
For 2017, RLI Corp. reported operating earnings per share of $1.60, beating the Zacks Consensus Estimate by 2.6% but declined 23.1% year over year.
Total revenues of $792.8 million rose 1.4% year over year.
Operational Performance
Operating revenues for the quarter totaled $202.7 million, up 0.9% year over year owing to higher net premiums earned as well as net investment income. Also, the top line outpaced the Zacks Consensus Estimate of $198 million by 2.4%.
Gross premiums written improved 11% year over year to $229.1 million on the back of a solid performance by the Property and Surety segments.
Total expenses increased 6% year over year to $184.7 million due to higher loss and settlement expenses, policy acquisition costs, insurance operating expenses plus general corporate expenses.
The company reported underwriting income of $26.8 million, which plunged 64.8% year over year. Combined ratio deteriorated 690 basis points year over year to 96.4%. Nonetheless, the company has been able to deliver underwriting profits for the last 21 straight years.
The property and casualty (P&C) insurer’s net investment income improved nearly 9.8% year over year to $14.4 million. Total return from the investment portfolio was 1.4% while the bond portfolio returned 0.4%. The equity portfolio yielded 5.7%.
Financial Update
The company exited the fourth quarter with total investments and cash of $2.1 billion, up 5.9% from the year-end 2016.
Book value was $19.33 per share as of Dec 31, 2017, up 3.1% from Dec 31, 2016.
Long-term debt was $148.9 million, reflecting a 0.1% rise from the 2016-end level.
Statutory surplus nudged up 0.5% year over year to $864.6 million.
Net cash flow from operations inched up 0.3% to $51.6 million in the quarter.
Dividend Payout
On Dec 27, 2017, the company paid out a cash dividend of 21 cents per share for an aggregate amount of $86.5 million. In the last 10 years, the average annual growth rate of the P&C insurer’s quarterly dividend came up to 6.2%.
Interestingly, on the aforementioned date, the company paid a special cash dividend of $1.75 per share, resulting in a tax benefit of $1.9 million (4 cents per share).
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter. In the past month, the consensus estimate has shifted by 19.1% due to these changes.
RLI Corp. Price and Consensus
RLI Corp. Price and Consensus | RLI Corp. Quote
VGM Scores
At this time, RLI has a subpar Growth Score of D, however its Momentum is doing a lot better with a B. The stock was allocated a grade of F on the value side, putting it in the fifth quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
The company's stock is suitable solely for momentum investors based on our style scores.
Outlook
Estimates have been trending upward for the stock and the magnitude of this revision looks promising. It comes with little surprise that RLI has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.