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Reasons Why Investors Should Retain Axis Capital (AXS) Stock

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AXIS Capital Holdings Limited (AXS - Free Report) has been gaining momentum on the back of better pricing, margin expansion, new business opportunities as well as solid market presence.

Growth Projections

The Zacks Consensus Estimate for AXIS Capital’s 2022 and 2023 earnings per share is pegged at $5.50 and $7.28, indicating an increase of 4.7% and 32.3%, respectively, from the corresponding year-ago reported figure. The long-term earnings growth rate is currently pegged at 5%.

Estimate Revision

The Zacks Consensus Estimate for 2022 and 2023 has moved 10% and 0.9% north, respectively, in the past 30 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 three of the last four quarters and missed in one, the average being 16.47%.

Zacks Rank & Price Performance

AXIS Capital currently carries a Zacks Rank #3 (Hold). In the past year, the stock has rallied 7% compared with the industry’s increase of 10%.

Zacks Investment Research
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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.

Return on Equity (ROE)

AXIS Capital’s ROE for the trailing 12 months is 12.5%, expanded 690 basis points year over year. This reflects its efficiency in utilizing shareholders’ funds.

Business Tailwinds

The property and casualty insurer remains poised to gain from repositioning of portfolio and markets offering profitable growth, lower volatility, strong market presence, better pricing as well as margin expansion.

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 was 7% in the third quarter of 2022, representing the 20th straight quarter of positive rate change. AXIS Capital expects disciplined pricing to persist in both insurance and reinsurance in 2023.

The Insurance segment should continue to gain from favorable market conditions, increased new business opportunities, rate increases on renewal and continued strong retentions.

The Reinsurance segment is expected to benefit from increases in accident and health, motor, catastrophe, and credit and surety lines as well as increases in liability and professional lines owing to premium adjustments, primarily related to favorable market conditions, new business growth and increased rates on business in North America and Global Markets.

The insurance industry has been witnessing accelerated digitalization. AXS has made investments in technology that help in effective usage of data, aid higher-value processes and activities, support new lines of business and enable efficient operations.

Axis Capital has an impressive dividend history, boasting one of the highest dividend yields among its peers. It hiked dividends for the last 18 years at a nine-year CAGR (2015 – 2022) of 5 %, driven by solid earnings. Its dividend yield is currently 3.1%, way above the industry average of 0.3%. AXS also has a $65 million share buyback program through 2022 under its authorization.

Stocks to Consider

Some better-ranked stocks from the property and casualty insurance industry are W.R. Berkley Corporation (WRB - Free Report) , Berkshire Hathaway (BRK.B - Free Report) and American Financial Group, Inc. (AFG - Free Report) . While W.R. Berkley sports a Zacks Rank #1 (Strong Buy), Berkshire Hathaway and American Financial carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

The bottom line of W.R. Berkley surpassed earnings estimates in each of the last four quarters, the average beat being 25.63%. In the past year, the insurer has gained 31.8%.

The Zacks Consensus Estimate for W.R. Berkley’s 2022 and 2023 earnings has moved 5.1% and 2.4% north, respectively, in the past 30 days.

Berkshire Hathaway delivered a four-quarter average earnings surprise of 22.18%.  In the past year, Berkshire Hathaway has gained 9.6%.

The Zacks Consensus Estimate for BRK.B’s 2022 and 2023 earnings implies a respective increase of 15% and 6.2% from the year-ago reported number.

American Financial’s earnings surpassed estimates in each of the last four quarters, the average beat being 28.16%. In the past year, American Financial has lost 2.1%.

The Zacks Consensus Estimate for AFG’s 2022 and 2023 earnings has moved 0.6% and 1.8% north, respectively, in the past seven days.

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