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W.R. Berkley (WRB) Gains 21% YTD: More Room for Growth?

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Shares of W.R. Berkley Corporation (WRB - Free Report) have gained 20.9% year to date compared with the industry’s growth of 17%. With a market capitalization of $14.2 billion, the average volume of W.R. Berkley’s shares traded in the last three months was 0.6 million.

Solid insurance business, strong international business and sturdy financial position should continue to drive W.R. Berkley.

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This Zacks Rank #2 (Buy) insurer has a solid track record of beating earnings estimates in the last five quarters. Return on equity (ROE) for the trailing 12 months is 6.9%, comparing favorably with the industry’s 5.6%, reflecting efficiency in utilizing shareholders’ fund.  W.R. Berkley targets 15% ROE over the long term.

Can it Retain the Momentum?

The Zacks Consensus Estimate for 2021 and 2022 earnings indicates year-over-year growth of 107.8% and 3.4%, respectively. The long-term earnings growth rate is currently pegged at 9%. It has a favorable Growth Score of B.

The consensus estimate for 2021 and 2022 has moved 11.6% and 4.2% north in the past 30 days, reflecting analyst optimism.

Being one of the nation’s largest commercial lines property casualty insurance providers, W.R. Berkley is poised to grow, riding on the strength of rate increases, reserving discipline, solid balance sheet and prudent capital management policy. The insurer boasts more than 56 straight quarters of favorable reserve development.

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.

W.R. Berkley’s 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.

W.R. Berkley maintains a solid balance sheet with sufficient liquidity and strong cash flows. Banking on its stable cash flow, W.R. Berkley has raised dividends 16 times since 2005 and paid 13 special dividends since 2012.  Its current dividend yield of 0.7% is better than the industry average of 0.4%, which makes WRB stock an attractive pick for yield-seeking investors.

W.R. Berkley 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. Back-tested results have shown that stocks with a VGM Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2 are the best investment options.

Other Stocks to Consider

Some other top-ranked stocks from the same space include First American Financial (FAF - Free Report) , Kinsale Capital Group (KNSL - Free Report) and Cincinnati Financial (CINF - Free Report) .

First American sports a Zacks Rank #1 (Strong Buy). The Zacks Consensus Estimate for 2021 and 2022 earnings has moved up 5.5% and 6.3%, respectively, in the past 30 days. First American delivered a four-quarter average earnings surprise of 29.19%. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for 2021 and 2022 earnings of Kinsale Capital, sporting a Zacks Rank #1, has moved up 15.2% and 11.7% in the past 30 days. Kinsale Capital delivered a four-quarter average earnings surprise of 37.63%.

Cincinnati Financial carries a Zacks Rank #2 (Buy). The Zacks Consensus Estimate for 2021 and 2022 has moved up 0.9% and 5% in the past 30 days. Cincinnati Financial delivered a four-quarter average earnings surprise of 40.05%.

Shares of First American Financial, Kinsale Capital and Cincinnati Financial have gained 50.3%, 4.5% and 36%, respectively year to date.