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W.R. Berkley Stock Rises 15.8% in 6 Months: Will the Rally Last?

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Shares of W.R. Berkley (WRB - Free Report) have gained 15.8% in the past six months compared with the industry's growth of 12.5%. The Finance sector and the Zacks S&P 500 index have returned 7.9% and 14.7%, respectively, in the said time frame. With a market capitalization of $23.02 billion, the average volume of shares traded in the last three months was 1.77 million. Currently priced at $60.42, the stock is a little below its 52-week high of $61.96.

WRB Outperforms Industry, Sector, S&P 500 in 3 Months

Zacks Investment Research
Image Source: Zacks Investment Research

The rally was largely driven by higher premiums, lower claims frequency in certain lines of business, growth in exposure, effective capital deployment and sufficient liquidity.

This Zacks Rank #3 (Hold) insurer has a decent earnings surprise history. It surpassed earnings estimates in each of the last four quarters, the average being 7.10%.

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

WRB Trading Above 50-Day and 200-Day Moving Average

The stock is trading above its 50-day and 200-day simple moving average (SMA) of $58.40 and $55.62, respectively, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.

WRB’s Growth Projection Encourages

The Zacks Consensus Estimate for W.R. Berkley’s 2024 earnings per share indicates a year-over-year increase of 20.7%. The consensus estimate for revenues is pegged at $13.56 billion, implying a year-over-year improvement of 12%. The consensus estimate for 2025 earnings per share and revenues indicates an increase of 8.8% and 8.2%, respectively, from the 2024 estimates.

Earnings have grown 24.3% in the past five years, better than the industry average of 11.4%. The expected long-term earnings growth rate is 12.7%, outperforming the industry average of 11.2%. WRB has an impressive Growth Score of B. This style score helps analyze the growth prospects of a company.

Will the Bull Run Continue?

The Zacks Consensus Estimate for 2025 earnings has moved 0.4% north in the past 30 days, reflecting analysts’ optimism.

The Insurance business of W.R. Berkley is well-poised to grow, given higher premiums from other liability, short-tail lines, workers' compensation, commercial automobile and professional liability.

Higher premiums at casualty reinsurance, property reinsurance and monoline excess are likely to drive the performance of the Reinsurance & Monoline Excess segment. Underwriting income should gain from the compounding rate improvement above loss cost trends, along with growth in exposure and lower claims frequency in certain lines of business.

WRB is one of the largest commercial line property and casualty insurance providers. It has a solid balance sheet, with sufficient liquidity and robust cash flows that support growth initiatives and effective capital deployment. 

Net investment income should continue to improve as WRB also invests in alternative assets, such as private equity funds and direct real estate opportunities. The combination of a high-quality fixed maturity portfolio, along with solid operating cash flow, enabled the insurer to invest at higher interest rates.

W.R. Berkley has a solid balance sheet with sufficient liquidity and strong cash flows, given its operational strength. A strong capital position enables the nation’s largest commercial line property casualty insurance provider to deploy capital via share repurchases, special dividends and dividend hikes that enhance shareholders' value.

WRB’s Impressive Dividend History

A strong capital position helps W.R. Berkley in wealth distribution via share repurchases, special dividends and dividend hikes that enhance shareholders’ value. In June 2024, W.R. Berkley approved a 9.1% hike in its quarterly dividend, marking an increase every year since 2005. The company returned a total capital of $138 million, comprising $95 million of special dividends and $31 million of regular dividends in the third quarter of 2024. Its dividend yield of 0.5% is higher than the industry average of 0.3%.

Headwinds

However, catastrophe loss had a significant impact on the company’s results, inducing volatility in underwriting profitability. The losses stem from winter storms and wildfires. Exposure to catastrophe loss remains a concern as the unpredictability of a natural disaster and the occurrence of the same hampers results.

Stocks to Consider

Some better-ranked stocks from the property and casualty insurance industry are First American Financial Corporation (FAF - Free Report) , Kinsale Capital Group, Inc. (KNSL - Free Report) and The Travelers Companies, Inc. (TRV - Free Report) . While First American sports a Zacks Rank #1 (Strong Buy), Kinsale Capital and The Travelers carry a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

The Zacks Consensus Estimate for First American’s 2024 and 2025 earnings indicates 5% and 32.1% year-over-year growth, respectively. In the past six months, FAF’s stock has surged 13.9%.

The Zacks Consensus Estimate for 2024 and 2025 earnings has moved 2.5% and 4.3% north, respectively, in the past 30 days.

Kinsale Capital’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 9.41%. In the past six months, KNSL’s stock has surged 26.8%.

The Zacks Consensus Estimate for KNSL’s 2024 and 2025 earnings indicates 24.1% and 17% year-over-year growth, respectively.

The Travelers’ earnings surpassed estimates in three of the last four quarters and missed in one, the average earnings surprise being 25.40%. In the past six months, TRV’s stock has surged 19.3%.

The Zacks Consensus Estimate for TRV’s 2024 and 2025 earnings indicates 41.9% and 9.4% year-over-year growth, respectively.

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