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Why You Should Stay Invested in Axis Capital (AXS) Stock

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AXIS Capital Holdings Limited (AXS - Free Report) has been gaining momentum on the back of favorable market conditions, increased new business opportunities, rate increases and prudent capital deployment.

Growth Projections

The Zacks Consensus Estimate for AXIS Capital’s 2022 and 2023 earnings per share is pegged at $6.02 and $6.55, indicating an increase of 17.6% and 8.8%, respectively, from the corresponding year-ago reported figure. The long-term earnings growth rate is currently pegged at 5%.

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 54.8%.

Zacks Rank & Price Performance

AXIS Capital currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 7.8% against the industry’s decrease of 5.7%.

Zacks Investment Research
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Style Score

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

Return on Equity (ROE)

AXIS Capital’s ROE for the trailing 12 months is 11.8%, up 980 basis points year over year. This reflects its efficiency in utilizing shareholders’ funds. 

Business Tailwinds

The Insurance segment delivered its fifth consecutive quarter of 20% growth in the first quarter of 2022, which set production records for gross and net premiums written and net premiums earned. This segment should continue to gain from favorable market conditions, increased new business opportunities, rate increases on renewal and continued strong retentions.

Riding on increases in accident and health (A&H), 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. AXS expects the reinsurance market to continue to gain momentum and there are opportunities to achieve the required risk-adjusted rate increases.

AXIS Capital continues to build on its Specialty Insurance, Reinsurance plus A&H to pave the way for long-term growth. This leading specialty insurer and global reinsurer remains focused on growing its business lines that are likely to provide a solid double-digit return on equity opportunities.

In June 2022, AXIS Group Benefits, part of the A&H division, introduced HealthGap, which is likely to aid AXIS Group Benefit’s expansion into the traditional employer market. AXIS Group Benefits will now offer coverage across multiple sectors in the United States.

AXIS Capital expects disciplined pricing to persist in both insurance and reinsurance through 2023. Pricing improved in virtually every line of business, with many lines continuing to witness strong double-digit increases. The average rate increase in the Insurance segment marked the 18th consecutive quarter of rate increase and the eighth consecutive quarter of double-digit increase in the first quarter.

AXIS Capital has increased its dividend for 18 straight years. AXS has raised dividends at a nine-year (2014-2022) CAGR of 5.3%, which makes the stock an attractive pick for yield-seeking investors. Its current dividend yield of 3.2% is better than the industry average of 0.4%.

Stocks to Consider

Some better-ranked stocks in the insurance industry are United Fire Group, Inc. (UFCS - Free Report) , RLI Corp. (RLI - Free Report) and Fidelity National Financial, Inc. (FNF - Free Report) . While United Fire sports a Zacks Rank #1 (Strong Buy), RLI Corp. and Fidelity National carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

United Fire’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 270.8%. In the past year, UFCS' stock has gained 34.4%.

The Zacks Consensus Estimate for UFCS’ 2022 earnings has moved 23.5% north in the past 60 days.

The Zacks Consensus Estimate for RLI’s 2022 earnings implies 13.2% year-over-year growth. In the past year, RLI stock has rallied 6.8%.

RLI’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 45.9%.

Fidelity National’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.6%. In the past year, FNF stock has lost 13.3%.

The Zacks Consensus Estimate for Fidelity National’s 2022 and 2023 earnings has moved 0.3% and 0.5% north, respectively, in the past 60 days.

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