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Will Rising Costs Hurt Kinsale Capital's (KNSL) Q2 Earnings?
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Kinsale Capital Group, Inc. (KNSL - Free Report) is set to report its second-quarter 2023 results on Jul 27, after the closing bell.
What do the Estimates Say
The Zacks Consensus Estimate for second-quarter earnings per share (EPS) of $2.51 suggests a 30.7% increase from the prior-year quarter’s figure of $1.92. The consensus mark witnessed one downward revision against none in the opposite direction over the past week. The consensus estimate for second-quarter revenues of $282 million indicates a 57.6% increase from the year-ago reported figure.
Kinsale Capital beat the consensus estimate for earnings in each of the trailing four quarters, with the average surprise being 14.8%. This is depicted in the graph below:
Kinsale Capital Group, Inc. Price and EPS Surprise
Before we get into what to expect for the to-be-reported quarter in detail, it is worth looking at KNSL’s first-quarter performance.
Q1 Earnings Rewind
The Property and Casualty (P&C) insurer reported a net operating EPS of $2.44 for the first quarter, beating the Zacks Consensus Estimate by 8.9%. The quarterly results benefited from a favorable pricing environment and a focus on disciplined underwriting and cost management.
The top line of Kinsale Capital is expected to have benefited from higher net premiums earned, which is the primary contributor to its revenues. This metric is likely to have been driven by favorable P&C market conditions and rate increases in the second quarter.
Our estimate for the net earned premiums of KNSL is pegged at $248.3 million, indicating a 30.6% year-over-year increase. Meanwhile, net investment income is likely to have been favored by a high-interest rate environment. Our estimate for net investment income stands at $14.9 million, implying a rise of 40.4% from the year-ago reported figure. Moreover, given the current inverted yield curve, the company should have benefited from investing in shorter-duration securities.
The hard insurance market with rising premium rates and improving Inland Marine, energy, general casualty and entertainment divisions are likely to have driven Kinsale Capital’s revenue growth. KNSL’s disciplined underwriting, pricing and sustained record of profitability are likely to have aided its second-quarter performance.
However, Kinsale Capital’s profits are likely to have suffered a setback due to escalating costs. Rising loss and loss adjustment expenses may have impacted the bottom line negatively in the second quarter. Our estimate for the metric stands at $144.5 million for the second quarter of 2023, making earnings beat uncertain.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Kinsale Capital this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, this is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of -0.29%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Kinsale Capital currently carries a Zacks Rank #2.
Stocks to Consider
Here are some companies from the broader Finance space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Arch Capital Group Ltd. (ACGL - Free Report) has an Earnings ESP of +1.57% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Arch Capital’s bottom line for the to-be-reported quarter is pegged at $1.65 per share, which witnessed no movement in the past week. The consensus estimate for ACGL’s revenues is pegged at $3.1 billion.
The Zacks Consensus Estimate for GL’s bottom line for the to-be-reported quarter is pegged at $2.57 per share, indicating 24.2% year-over-year growth. The estimate witnessed two upward revisions in the past 30 days against one in the opposite direction. GL beat earnings estimates in each of the past four quarters, with an average surprise of 2.1%.
Goosehead Insurance, Inc (GSHD - Free Report) has an Earnings ESP of +20.81% and carries a Zacks Rank of 3.
The Zacks Consensus Estimate for GSHD’s bottom line for the to-be-reported quarter is pegged at $0.30 per share, suggesting an 87.5% year-over-year increase. The estimate witnessed one upward revision in the past month against none in the opposite direction. GSHD beat earnings estimates in two of the past four quarters, missed twice, with an average surprise of 86%.
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Will Rising Costs Hurt Kinsale Capital's (KNSL) Q2 Earnings?
Kinsale Capital Group, Inc. (KNSL - Free Report) is set to report its second-quarter 2023 results on Jul 27, after the closing bell.
What do the Estimates Say
The Zacks Consensus Estimate for second-quarter earnings per share (EPS) of $2.51 suggests a 30.7% increase from the prior-year quarter’s figure of $1.92. The consensus mark witnessed one downward revision against none in the opposite direction over the past week. The consensus estimate for second-quarter revenues of $282 million indicates a 57.6% increase from the year-ago reported figure.
Kinsale Capital beat the consensus estimate for earnings in each of the trailing four quarters, with the average surprise being 14.8%. This is depicted in the graph below:
Kinsale Capital Group, Inc. Price and EPS Surprise
Kinsale Capital Group, Inc. price-eps-surprise | Kinsale Capital Group, Inc. Quote
Before we get into what to expect for the to-be-reported quarter in detail, it is worth looking at KNSL’s first-quarter performance.
Q1 Earnings Rewind
The Property and Casualty (P&C) insurer reported a net operating EPS of $2.44 for the first quarter, beating the Zacks Consensus Estimate by 8.9%. The quarterly results benefited from a favorable pricing environment and a focus on disciplined underwriting and cost management.
Now let’s see how things have shaped up before the second-quarter earningsannouncement.
Q2 Factors to Note
The top line of Kinsale Capital is expected to have benefited from higher net premiums earned, which is the primary contributor to its revenues. This metric is likely to have been driven by favorable P&C market conditions and rate increases in the second quarter.
Our estimate for the net earned premiums of KNSL is pegged at $248.3 million, indicating a 30.6% year-over-year increase. Meanwhile, net investment income is likely to have been favored by a high-interest rate environment. Our estimate for net investment income stands at $14.9 million, implying a rise of 40.4% from the year-ago reported figure. Moreover, given the current inverted yield curve, the company should have benefited from investing in shorter-duration securities.
The hard insurance market with rising premium rates and improving Inland Marine, energy, general casualty and entertainment divisions are likely to have driven Kinsale Capital’s revenue growth. KNSL’s disciplined underwriting, pricing and sustained record of profitability are likely to have aided its second-quarter performance.
However, Kinsale Capital’s profits are likely to have suffered a setback due to escalating costs. Rising loss and loss adjustment expenses may have impacted the bottom line negatively in the second quarter. Our estimate for the metric stands at $144.5 million for the second quarter of 2023, making earnings beat uncertain.
Earnings Whispers
Our proven model does not conclusively predict an earnings beat for Kinsale Capital this time around. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the chances of an earnings beat. However, this is not the case here, as you will see below.
Earnings ESP: The company has an Earnings ESP of -0.29%. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.
Zacks Rank: Kinsale Capital currently carries a Zacks Rank #2.
Stocks to Consider
Here are some companies from the broader Finance space that you may want to consider, as our model shows that these have the right combination of elements to post an earnings beat this time around:
Arch Capital Group Ltd. (ACGL - Free Report) has an Earnings ESP of +1.57% and is a Zacks #3 Ranked player.
The Zacks Consensus Estimate for Arch Capital’s bottom line for the to-be-reported quarter is pegged at $1.65 per share, which witnessed no movement in the past week. The consensus estimate for ACGL’s revenues is pegged at $3.1 billion.
Globe Life Inc. (GL - Free Report) has an Earnings ESP of +0.78% and carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for GL’s bottom line for the to-be-reported quarter is pegged at $2.57 per share, indicating 24.2% year-over-year growth. The estimate witnessed two upward revisions in the past 30 days against one in the opposite direction. GL beat earnings estimates in each of the past four quarters, with an average surprise of 2.1%.
Goosehead Insurance, Inc (GSHD - Free Report) has an Earnings ESP of +20.81% and carries a Zacks Rank of 3.
The Zacks Consensus Estimate for GSHD’s bottom line for the to-be-reported quarter is pegged at $0.30 per share, suggesting an 87.5% year-over-year increase. The estimate witnessed one upward revision in the past month against none in the opposite direction. GSHD beat earnings estimates in two of the past four quarters, missed twice, with an average surprise of 86%.
Stay on top of upcoming earnings announcements with the Zacks Earnings Calendar.