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Here's Why Hold Strategy is Appropriate for Everest Re (RE)
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Everest Re Group, Ltd. has been in investors’ good books on the back of rate increases, strategic growth in international lines, higher limited partnership income and a solid capital position.
Growth Projections
The Zacks Consensus Estimate for Everest Re’s 2022 and 2023 earnings per share is pegged at $33.8 and $40.5, indicating year-over-year increases of 16.8% and 19.8%, respectively. The expected long-term earnings growth rate is 10.9%.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2022 and 2023 has moved 0.1% and 0.5% north, respectively in the past seven days. This should instill investors' confidence in the stock.
Zacks Rank & Price Performance
Everest Re currently carries a Zacks Rank #3 (Hold). In the past year, the RE stock has rallied 2.1% against the industry’s decline of 1.1%.
Image Source: Zacks Investment Research
Style Score
Everest Re has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
Return on Equity
Everest Re’s trailing 12-month return on equity (“ROE”) was 11.4%, up 230 basis points year over year. ROE reflects its efficiency in using shareholders’ funds.
Business Tailwinds
The solid performance across the Reinsurance and Insurance operation segments of Everest Re is likely to boost the top line.
Increased exposure and new business opportunities with the recovery of the U.S. economy, continued double-digit rate increases, an expanded share on attractive renewals and strong renewal retention are likely to boost the growth of Reinsurance and Insurance operations. Casualty pro rata and strategic growth in international lines are also likely to drive premium growth of the Reinsurance business.
The higher limited partnership income, which reflects increases in reported net asset values as well as additional income from fixed maturity investments, is likely to drive net investment income.
The attritional loss ratio is likely to improve as the insurer continues to achieve more favorable rates in terms as well as shifts the book toward accounts with better risk-adjusted return potential. The underwriting-related expense ratio should improve, riding on higher earned premiums and focus on operational efficiency.
Everest Re should gain from strong profitability, positive cash flow from operations and balance sheet liquidity. Solid operating cash flow should enable the insurer to invest in a rising rate environment.
Everest Re boasts a consistent increase in dividends, with the metric witnessing a nine-year CAGR (2014-2022) of 9.2%. The current dividend yield of 2.4% betters the industry average of 0.4%, making the stock an attractive pick for yield-seeking investors.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 29.95%. In the past year, W.R. Berkley stock has increased 33%.
The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings per share indicates year-over-year increases of 50.6% and 10.4%, respectively.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 37.09%. In the past year, American Financial has lost 1.7%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 2.2% and 3.3% north, respectively, in the past seven days.
The bottom line of ProAssurance surpassed earnings estimates in three of the last four quarters and missed in one, the average being 150.9%. In the past year, the insurer has lost 4.4%.
The Zacks Consensus Estimate for ProAssurance’s 2022 and 2023 earnings has moved 16.9% and 13.9% north, respectively, in the past seven days.
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Here's Why Hold Strategy is Appropriate for Everest Re (RE)
Everest Re Group, Ltd. has been in investors’ good books on the back of rate increases, strategic growth in international lines, higher limited partnership income and a solid capital position.
Growth Projections
The Zacks Consensus Estimate for Everest Re’s 2022 and 2023 earnings per share is pegged at $33.8 and $40.5, indicating year-over-year increases of 16.8% and 19.8%, respectively. The expected long-term earnings growth rate is 10.9%.
Northbound Estimate Revision
The Zacks Consensus Estimate for 2022 and 2023 has moved 0.1% and 0.5% north, respectively in the past seven days. This should instill investors' confidence in the stock.
Zacks Rank & Price Performance
Everest Re currently carries a Zacks Rank #3 (Hold). In the past year, the RE stock has rallied 2.1% against the industry’s decline of 1.1%.
Image Source: Zacks Investment Research
Style Score
Everest Re has a favorable VGM Score of B. VGM Score helps identify stocks with the most attractive value, the best growth and the most promising momentum.
Return on Equity
Everest Re’s trailing 12-month return on equity (“ROE”) was 11.4%, up 230 basis points year over year. ROE reflects its efficiency in using shareholders’ funds.
Business Tailwinds
The solid performance across the Reinsurance and Insurance operation segments of Everest Re is likely to boost the top line.
Increased exposure and new business opportunities with the recovery of the U.S. economy, continued double-digit rate increases, an expanded share on attractive renewals and strong renewal retention are likely to boost the growth of Reinsurance and Insurance operations. Casualty pro rata and strategic growth in international lines are also likely to drive premium growth of the Reinsurance business.
The higher limited partnership income, which reflects increases in reported net asset values as well as additional income from fixed maturity investments, is likely to drive net investment income.
The attritional loss ratio is likely to improve as the insurer continues to achieve more favorable rates in terms as well as shifts the book toward accounts with better risk-adjusted return potential. The underwriting-related expense ratio should improve, riding on higher earned premiums and focus on operational efficiency.
Everest Re should gain from strong profitability, positive cash flow from operations and balance sheet liquidity. Solid operating cash flow should enable the insurer to invest in a rising rate environment.
Everest Re boasts a consistent increase in dividends, with the metric witnessing a nine-year CAGR (2014-2022) of 9.2%. The current dividend yield of 2.4% betters the industry average of 0.4%, making the stock an attractive pick for yield-seeking investors.
Stocks to Consider
Some better-ranked stocks from the property and casualty insurance industry are W.R. Berkley Corporation (WRB - Free Report) , American Financial Group, Inc. (AFG - Free Report) and ProAssurance Corporation (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.
W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 29.95%. In the past year, W.R. Berkley stock has increased 33%.
The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings per share indicates year-over-year increases of 50.6% and 10.4%, respectively.
American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 37.09%. In the past year, American Financial has lost 1.7%.
The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 2.2% and 3.3% north, respectively, in the past seven days.
The bottom line of ProAssurance surpassed earnings estimates in three of the last four quarters and missed in one, the average being 150.9%. In the past year, the insurer has lost 4.4%.
The Zacks Consensus Estimate for ProAssurance’s 2022 and 2023 earnings has moved 16.9% and 13.9% north, respectively, in the past seven days.