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W. R. Berkley (WRB) Rises 21% YTD: Can it Retain the Momentum?

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Shares of W. R. Berkley Corporation (WRB - Free Report) have rallied 21% year to date, outperforming the industry’s increase of 1.3%. The Finance sector has declined 14.7% and the Zacks S&P 500 composite’s decline of 18.6% in the same time frame. With a market capitalization of $17.6 billion, the average volume of shares traded in the last three months was 1.6 million.

W. R. Berkley has a decent history of delivering positive surprises in the last seven reported quarters.

WRB has a VGM Score of B. The stock carries an impressive VGM Score of A. This helps to identify stocks with the most attractive value, growth and momentum.

Solid insurance business, strong international business and sturdy financial position continue to drive WRB. The Zacks Consensus Estimate for 2022 and 2023 has moved 4.9% and 4.2% north, respectively in the past 30 days, reflecting analysts’ optimism.  
 

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Return on equity in the trailing 12 months was 15.8%, better than the industry average of 5.7%. WRB aims to achieve a 15% ROE over the long term.

Can WRB Retain the Momentum?

The Zacks Consensus Estimate for 2022 earnings is pegged at $3.85, indicating an increase of 13.2% on 18.2% higher revenues of $10.9 billion. The consensus estimate for 2023 earnings is pegged at $4.26, indicating an increase of 10.6% on 12.8% higher revenues of $12.3 billion. The long-term earnings growth rate is currently pegged at 9%. WRB has a Growth Score of B. This style score analyzes the growth prospects of a company.

This Zacks Rank #2 (Buy) largest commercial lines property casualty insurance provider in the nation 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.

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.

With the Fed raising the interest rate by 25 basis points, we expect to see an increase in net investment income as WRB also invests in alternative assets such as private equity fund and direct real estate opportunities as well as benefits from interest rate rise.

WRB has a Value Score of B. This style score helps find the most attractive value stocks. Back-tested results have shown that stocks with a Value Score of A or B combined with a Zacks Rank #1 (Strong Buy) or #2 offers better returns.

Solid Dividend History

Banking on its stable cash flow, W.R. Berkley has raised dividends 15 times since 2005 and paid 11 special dividends since 2012.  Its current dividend yield of 0.7% is better than the industry average of 0.3%, which makes the stock an attractive pick for yield-seeking investors.

Other Stocks to Consider

Some other top-ranked stocks from the property and casualty insurance sector are RLI Corp. (RLI - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) and American Financial Group, Inc. (AFG - Free Report) . While RLI currently sports a Zacks Rank #1, American Financial and W.R. Berkley carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

RLI has a solid track record of beating earnings estimates in each of the last seven quarters. In the past year, RLI stock has increased 10.5%.

The Zacks Consensus Estimate for RLI’s 2022 and 2023 earnings per share is pegged at $4.35 and $4.45, indicating year-over-year increases of 12.4% and 2.3%, respectively.

Cincinnati Financial’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 32.55%. In the past year, Cincinnati Financial 's stock has increased 8.1%.

The Zacks Consensus Estimate for CINF’s 2022 and 2023 earnings has moved 3.6% and 1.7% north, respectively, in the past 30 days.

American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 41.72%. In the past year, American Financial has lost 0.3%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 9.8% and 6.9% north, respectively, in the past 30 days.