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Why You Should Hold W.R. Berkley (WRB) Stock in Your Portfolio

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W.R. Berkley’s (WRB - Free Report) solid insurance business, strong international business and solid financial position along with favorable growth estimates make it worthy of retention in one’s portfolio.

The company has a solid earnings surprise history. It beat estimates in each of the last four reported quarters.

Zacks Rank & Price Performance

W.R. Berkley currently carries a Zacks Rank #3 (Hold). Year to date, the stock has gained 12%, compared with the industry’s increase of 14.9%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Growth Projections

The Zacks Consensus Estimate for 2021 earnings is pegged at $4.39, up 89.2% from the year-ago reported quarter. The consensus estimate for 2022 is pegged at $4.79, up 9% from the year-ago reported figure.  The long-term earnings growth rate is currently pegged at 9%.

The stock carries a favorable Growth Score of B. This style score analyses the growth prospects of the company.

Return on Equity (ROE)

The company’s ROE for the trailing 12 months is 11.3%, comparing favorably with the industry’s 5.7%, reflecting the company’s efficiency in utilizing shareholders’ fund.  The company targets 15% ROE over the long term.

VGM Score

The company is well poised for progress, as is evident from its favorable 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.

Business Tailwinds

The company primarily focuses on commercial lines including excess and surplus lines, admitted lines, and specialty personal lines.

Several new startup units in varied business lines, expansion of international business that offers diversification benefits, rate increase, benefits derived from market dislocations, and high retention should drive the Insurance business. It is well poised to capitalize on market dislocations.

Premium growth in the international unit is mainly supported by the emerging markets of the United Kingdom, Continental Europe, South America, Canada, Scandinavia, Asia and Australia.

Its fixed-income portfolio has been driving improvement in investment income and offers above market risk-adjusted investment returns.

W.R. Berkley maintains a solid balance sheet with sufficient liquidity and strong cash flows. It boasts 56 straight quarters of favorable reserve development. Its book value witnessed a 13-year CAGR of 13.6%.

Solid Dividend History

The company has been hiking dividends for the last 16 years at a CAGR of 11.2% and paying special dividends for the last 12 years. It boasts a solid dividend yield of 0.7%, higher than the industry average of 0.4%.

Stocks to Consider

Some better-ranked stocks in the same space include American Financial Group (AFG - Free Report) , Berkshire Hathaway (BRK.B - Free Report) , and Markel Corporation (MKL - Free Report) , all sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

American Financial Group delivered an earnings surprise of 45.73% in the last reported quarter.

Berkshire Hathaway delivered an earnings surprise of 16.67% in the last reported quarter.

Markel delivered an earnings surprise of 23.88% in the last reported quarter.