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Should You Retain Axis Capital (AXS) Stock in Your Portfolio?

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AXIS Capital Holdings Limited (AXS - Free Report) has been benefiting from core margin improvement, better underwriting income, new business growth and effective capital deployment.

Growth Projections

The Zacks Consensus Estimate for AXIS Capital’s 2022 earnings per share is pegged at $5.55, indicating an increase of 28.7% from the corresponding year-ago reported figure. The long-term earnings growth rate is currently pegged at 5%. The Zacks Consensus Estimate for 2022 earnings has moved 4.5% north in the past 60 days. This should instill investors' confidence in the stock.

Earnings Surprise History

AXIS Capital has a decent earnings surprise history. Its bottom line beat estimates in each of the last four quarters, the average being 60.14%.

Zacks Rank & Price Performance

AXIS Capital currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 9.2% compared with the industry’s increase of 20.6%.

Zacks Investment ResearchImage Source: Zacks Investment Research

Style Score

The company has a favorable VGM Score  of A. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.

Business Tailwinds

The repositioning of the portfolio over the past few years should continue to drive improvements in the underlying results of AXIS Capital. AXS witnessed core margin improvement for eight consecutive quarters.

The Insurance segment witnessed the 16th consecutive quarter of overall rate increases. The rates continue to increase in double digits. AXIS Capital is witnessing growth in lines such as Excess Casualty, Renewable Energy, A&H and Marine that continue to provide a strong double-digit return on equity opportunities. Riding on the insurer’s growing underwriting income, its combined ratio is improving.

By virtue of increases in accident and health, motor, catastrophe, and credit and surety lines as well as increases in liability and professional lines, new business growth and increased rates on business in North America and Global Markets, the Reinsurance segment is expected to gain in the long run.

Pricing improved in virtually every line of business, with many lines continuing to witness strong double-digit increases. Industry issues such as low-interest rates, lower levels of favorable development, social inflation and the COVID-19 pandemic should drive further pricing improvements through 2022.

Positive returns from alternative assets, increase in income from fixed maturities attributable to higher yields on the portfolio should drive the net investment income of the property and casualty insurer.

The loss ratio is likely to benefit from favorable rate trends, improved performance through the underwriting actions taken in property, liability, and aviation lines, improved loss experience and credit surety and accident and health lines as well as the impact of favorable pricing on loss trends.

AXIS Capital has increased its dividend for 18 straight years. AXS has raised dividend at a nine-year (2013-2021) CAGR of 5.9%, which makes the stock an attractive pick for yield-seeking investors. Its current dividend yield of 3% is better than the industry average of 0.3%.

Stocks to Consider

Some better-ranked stocks from the property and casualty insurance market are Fidelity National Financial (FNF - Free Report) , Hallmark Financial Services (HALL - Free Report) and ProAssurance (PRA - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fidelity National’s earnings surpassed estimates in each of the last four quarters, the average beat being 38.18%. In the past year, FNF has gained 38.6%.

The Zacks Consensus Estimate for FNF’s 2022 earnings has moved 4.6% north in the past 60 days.

The bottom line of Hallmark Financial surpassed estimates in two of the last four quarters and missed the same in the other two, the average being 53.62%.

In the past year, Hallmark Financial has rallied 34.5%. The Zacks Consensus Estimate for 2022 earnings has moved 60% north in the past 60 days.

ProAssurance’s earnings surpassed the Zacks Consensus Estimate in each of the last four quarters, the average beat being 233.34%. In the past year, PRA has gained 28.3%.

The Zacks Consensus Estimate for 2022 earnings has moved 5.3% north in the past 60 days.