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Markel (MKL) Up 2.6% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Markel (MKL - Free Report) . Shares have added about 2.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Markel due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Markel's Q4 Earnings, Revenues Top Estimates, Rise Y/Y
Markel reported fourth-quarter 2022 earnings of $26.15 per share, which beat the Zacks Consensus Estimate by about 41.5%. The bottom line increased 66.5% year over year.
Markel witnessed higher earned premiums and net investment income, which were offset by higher expenses and deterioration in the combined ratio.
Quarterly Operational Update
Total operating revenues of $3.6 billion beat the Zacks Consensus Estimate by 4.6%. The top line rose 22% year over year on higher earned premiums, products revenues, services and other revenues as well as higher net investment income.
Earned premiums increased 12.8% in the quarter. The increase was due to continued growth in gross premium volume from new business, strong policy retention levels, more favorable rates and expanded product offerings.
Net investment income increased 50.8% year over year to $145.1 million in the fourth quarter, driven by higher interest income on short-term investments as a result of higher short-term interest rates in 2022.
Total operating expenses of Markel increased 22.2% year over year to about $3.2 billion, primarily due to higher losses and loss adjustment expenses, underwriting, acquisition and insurance expenses, products expenses, services and other expenses and amortization of intangible assets.
Markel’s combined ratio deteriorated 550 bps year over year to 93.3 in the reported quarter.
Segment Update
Insurance: Gross premium increased 13.1% year over year to $2.1 billion. The uptick was driven by new business volume, strong policy retention levels, more favorable rates and expanded product offerings, resulting in growth across all its product lines.
Underwriting profit came in at $110.4 million, down 51.4% year over year. The combined ratio deteriorated 860 bps year over year to 93.8.
Reinsurance: Gross premiums decreased 27% year over year to $185 million, attributable to lower gross premiums within professional liability and property product lines, partly offset by higher gross premiums within several of other product lines, driven by more favorable premium adjustments and a favorable impact from the timing of renewal.
Underwriting profit of $23.5 million increased nearly sevenfold year over year. The combined ratio improved 790 bps year over year to 90.8 in the fourth quarter.
Markel Ventures: Operating revenues of $4.8 billion improved 31% year over year in 2022. Operating income of $325.2 million increased 19% year over year.
Full-Year Highlights
Markel incurred a net loss of $23.57 against $176.51 earned in 2021.
Operating revenues of $13.2 billion increased 22.1% from 2021 and beat the consensus estimate of $13.1 billion.
Earned premiums increased 16.7% to $7.6 billion.
The combined ratio deteriorated 200 bps year over year to 92.
Financial Update
Markel exited 2022 with investments, cash and cash equivalents and restricted cash and cash equivalents of $27.4 billion as of Dec 31 2022, down 3.2% from 2021 end.
The debt balance decreased 5.9% year over year to $4.1 billion as of Dec 31, 2022. The debt-to-capital ratio was 31.4% as of Dec 31, 2022, reflecting a deterioration of 177 basis points from 2021 end.
Book value per share decreased 10.2% from year-end 2021 to $929.27 as of Dec 31, 2022.
Operating cash flow of $2.7 billion in 2022 increased 19% year over year, reflecting strong cash inflows from underwriting operations, given the growth in premium volume in recent periods.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -10.39% due to these changes.
VGM Scores
Currently, Markel has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Markel has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Markel belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, Progressive (PGR - Free Report) , has gained 5.4% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Progressive reported revenues of $13.54 billion in the last reported quarter, representing a year-over-year change of +12.2%. EPS of $1.50 for the same period compares with $1.05 a year ago.
Progressive is expected to post earnings of $1.63 per share for the current quarter, representing a year-over-year change of +45.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -6.6%.
Progressive has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.
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Markel (MKL) Up 2.6% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Markel (MKL - Free Report) . Shares have added about 2.6% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Markel due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.
Markel's Q4 Earnings, Revenues Top Estimates, Rise Y/Y
Markel reported fourth-quarter 2022 earnings of $26.15 per share, which beat the Zacks Consensus Estimate by about 41.5%. The bottom line increased 66.5% year over year.
Markel witnessed higher earned premiums and net investment income, which were offset by higher expenses and deterioration in the combined ratio.
Quarterly Operational Update
Total operating revenues of $3.6 billion beat the Zacks Consensus Estimate by 4.6%. The top line rose 22% year over year on higher earned premiums, products revenues, services and other revenues as well as higher net investment income.
Earned premiums increased 12.8% in the quarter. The increase was due to continued growth in gross premium volume from new business, strong policy retention levels, more favorable rates and expanded product offerings.
Net investment income increased 50.8% year over year to $145.1 million in the fourth quarter, driven by higher interest income on short-term investments as a result of higher short-term interest rates in 2022.
Total operating expenses of Markel increased 22.2% year over year to about $3.2 billion, primarily due to higher losses and loss adjustment expenses, underwriting, acquisition and insurance expenses, products expenses, services and other expenses and amortization of intangible assets.
Markel’s combined ratio deteriorated 550 bps year over year to 93.3 in the reported quarter.
Segment Update
Insurance: Gross premium increased 13.1% year over year to $2.1 billion. The uptick was driven by new business volume, strong policy retention levels, more favorable rates and expanded product offerings, resulting in growth across all its product lines.
Underwriting profit came in at $110.4 million, down 51.4% year over year. The combined ratio deteriorated 860 bps year over year to 93.8.
Reinsurance: Gross premiums decreased 27% year over year to $185 million, attributable to lower gross premiums within professional liability and property product lines, partly offset by higher gross premiums within several of other product lines, driven by more favorable premium adjustments and a favorable impact from the timing of renewal.
Underwriting profit of $23.5 million increased nearly sevenfold year over year. The combined ratio improved 790 bps year over year to 90.8 in the fourth quarter.
Markel Ventures: Operating revenues of $4.8 billion improved 31% year over year in 2022. Operating income of $325.2 million increased 19% year over year.
Full-Year Highlights
Markel incurred a net loss of $23.57 against $176.51 earned in 2021.
Operating revenues of $13.2 billion increased 22.1% from 2021 and beat the consensus estimate of $13.1 billion.
Earned premiums increased 16.7% to $7.6 billion.
The combined ratio deteriorated 200 bps year over year to 92.
Financial Update
Markel exited 2022 with investments, cash and cash equivalents and restricted cash and cash equivalents of $27.4 billion as of Dec 31 2022, down 3.2% from 2021 end.
The debt balance decreased 5.9% year over year to $4.1 billion as of Dec 31, 2022. The debt-to-capital ratio was 31.4% as of Dec 31, 2022, reflecting a deterioration of 177 basis points from 2021 end.
Book value per share decreased 10.2% from year-end 2021 to $929.27 as of Dec 31, 2022.
Operating cash flow of $2.7 billion in 2022 increased 19% year over year, reflecting strong cash inflows from underwriting operations, given the growth in premium volume in recent periods.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -10.39% due to these changes.
VGM Scores
Currently, Markel has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise Markel has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
Markel belongs to the Zacks Insurance - Property and Casualty industry. Another stock from the same industry, Progressive (PGR - Free Report) , has gained 5.4% over the past month. More than a month has passed since the company reported results for the quarter ended December 2022.
Progressive reported revenues of $13.54 billion in the last reported quarter, representing a year-over-year change of +12.2%. EPS of $1.50 for the same period compares with $1.05 a year ago.
Progressive is expected to post earnings of $1.63 per share for the current quarter, representing a year-over-year change of +45.5%. Over the last 30 days, the Zacks Consensus Estimate has changed -6.6%.
Progressive has a Zacks Rank #2 (Buy) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of A.