Markel Corporation ( MKL Quick Quote MKL - Free Report) has been favored by investors given its favorable pricing trends across most of the product lines, strategic buyouts and solid financial standing. Growth Projections
The Zacks Consensus Estimate for Markel’s 2021 and 2022 earnings per share is pegged at $58.75 and $75.45, indicating a year-over-year increase of 123.8% and 28.4%, respectively.
Earnings estimates for 2021 and 2022 have moved up nearly 0.3% and 0.4%, respectively, in the past 30 days. This should instill investors' confidence in the stock.
Earnings Surprise History
Markel surpassed estimates in three of the last four reported quarters while missing in one, the average beat being 23.6%.
Zacks Rank & Price Performance
Markel currently carries a Zacks Rank #2 (Buy). In the past year, the stock has rallied 20%, outperforming the
industry’s growth of 12.9%. Image Source: Zacks Investment Research Return on Equity (ROE)
Markel’s ROE of 6.3% for the trailing 12 months is better than the industry average of 5.6%. This reflects the company’s efficiency in utilizing shareholders’ fund.
Markel has a favorable
VGM Score of A. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Markel has an impressive
Value Score of A that reflects an attractive valuation of the stock. MKL has a favorable Growth Score of B, which identifies the growth prospects of a company. Back-tested results show that stocks with a Value Score of A or B, when combined with a Zacks Rank #1 (Strong Buy) or 2, offer the best opportunities in the value investing space. Business Tailwinds
Strong growth in new business as well as the ongoing favorable pricing trends across most of the product lines, especially within the professional liability and general liability product lines in both the Insurance and Reinsurance segments, drives premium volumes in the professional liability and general liability product lines. Higher premium volumes are likely to boost the top line of this property and casualty insurer.
Markel continues to witness new business opportunities along with a strong rating environment. Markel considers strategic buyouts to be a prudent approach to ramp up growth profile. Such acquisitions have helped the insurer to not only enhance its surety capabilities but also ramp up Markel Ventures’ revenues and expand its reinsurance product offerings. Riding on revenues from Lansing Building Products, which was acquired in April 2020, MKL’s revenues have increased. Markel has been pursuing acquisitions for a while to achieve profitable growth in insurance operations and create an additional value on a diversified basis in Markel Ventures operations. Markel’s recent strategic endeavors support strong growth in new business. Recently, the insurer agreed to buy majority stake in Metromont LLC. With this latest addition to the portfolio, MKL will be able to gain from Metromont’s solid reputation in the market and its know-how in the precast concrete industry. In August 2021, Markel agreed to acquire the majority interest in Buckner to reinforce its capabilities in the construction industry. Due to an improvement in the attritional loss ratio, owing to a favorable pricing environment as well the impact of underwriting actions taken to enhance profitability, the consolidated combined ratio is also expected to improve in the long run. Markel’s expense ratio continues to improve, given the benefit of higher net earned premiums and increased efficiency. Markel seeks to maintain prudent levels of liquidity and financial leverage. Higher premium volume in the Insurance segment should benefit the operating cash flows of the insurer. Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance sector are
Kinsale Capital ( KNSL Quick Quote KNSL - Free Report) , First American Financial ( FAF Quick Quote FAF - Free Report) and Cincinnati Financial Corporation ( CINF Quick Quote CINF - Free Report) . While Kinsale Capital sports a Zacks Rank #1, First American and Cincinnati Financial carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here. Kinsale Capital’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 37.63%. In the past year, KNSL has lost 0.4%. The Zacks Consensus Estimate for 2021 and 2022 earnings has moved 15.2% and 11.7% north, respectively, in the past 60 days. Higher submission activity from brokers across most lines of business, higher rates on bound accounts, favorable market conditions and high retention rates arising from the contract renewals are likely to drive Kinsale Capital’s premium income. First American’s earnings surpassed estimates in each of the last four quarters, the average beat being 29.19%. In the past year, FAF has gained 44.8%. The Zacks Consensus Estimate for 2021 and 2022 earnings has moved 0.4% and 0.5% north, respectively, in the past 30 days. Higher direct premiums and escrow fees, an increased domestic residential purchase and commercial transactions, higher operating revenues in the home warranty business and higher net realized investment gains in both the home warranty, and property and casualty businesses are likely to drive First American’s premium income. Cincinnati Financial surpassed the estimates in each of the last four quarters, the average earnings surprise being 40.05%. In the past year, Cincinnati Financial has rallied 32.9%. The Zacks Consensus Estimate for 2021 and 2022 earnings has moved 1.3% and 5% north, respectively, in the past 60 days. Cincinnati Financial is poised to gain from premium growth initiatives, price increases and a higher level of insured exposures.