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WRB Outperforms Industry, Trades at a Premium: How to Play the Stock
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Key Takeaways
WRB focuses on commercial lines, including excess & surplus, admitted, and specialty personal lines.
WRB's growth drivers include diversification, reserving discipline, and alternative asset investments.
WRB's dividend yield of 0.5% exceeds the industry average of 0.2%.
Shares of W.R. Berkley Corporation (WRB - Free Report) have gained 23.6% in the past year, outperforming its industry, the Finance sector, and the Zacks S&P 500 composite’s growth of 8.4%, 20.4% and 20.3%, respectively.
The insurer has a market capitalization of $26.78 billion. The average volume of shares traded in the last three months was 1.8 million.
The insurer has a solid track record of beating earnings estimates in three of the last four quarters and matching in one, the average being 5.81%.
Image Source: Zacks Investment Research
WRB Shares are Expensive
WRB shares are trading at a premium to the industry. Its price-to-book value of 2.88X is higher than the industry average of 1.42X. Other insurers, such as Arch Capital Group Ltd. (ACGL - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) , and Cincinnati Financial Corporation (CINF - Free Report) , are also trading at a premium to the industry.
Image Source: Zacks Investment Research
WRB Trading Above 200-Day Moving Averages
Shares of W.R. Berkley closed at $70.63 on Friday, near its 52-week high of $76.38. This proximity underscores investor confidence. It has the ingredients for further price appreciation. The stock is trading above the 200-day simple moving average (SMA) of $65.40, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Image Source: Zacks Investment Research
WRB’s Encouraging Growth Projection
The Zacks Consensus Estimate for W.R. Berkley’s 2025 earnings per share indicates a year-over-year increase of 2.1%. The consensus estimate for revenues is pegged at $14.60 billion, implying a year-over-year improvement of 8%.
The consensus estimate for 2026 earnings per share and revenues indicates an increase of 11.1% and 6.6%, respectively, from the corresponding 2025 estimates. Notably, earnings grew 27.8% in the past five years, better than the industry average of 20.9%.
WRB’s Favorable Return on Capital
Return on equity for the trailing 12 months was 18.8%, which compared favorably with the industry’s 7.6%. This reflects its efficiency in utilizing shareholders’ funds.
Also, return on invested capital (ROIC) has been increasing over the last few quarters while the company raised its capital investment over the same time frame. This reflects WRB’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 8.8%, better than the industry average of 5.8%.
Key Drivers of WRB Stock
As part of its growth strategy, WRB has been focusing on commercial lines, including excess and surplus lines, admitted lines, and specialty personal lines, where it also has a competitive advantage.
WRB’s insurance business, which contributes the lion’s share to net premium written, is poised to grow on the strength of several new startup units in varied business lines, expansion of international business that offers diversification benefits, rate increase, market dislocations, and high retention.
WRB remains focused on expanding selectively in attractive global markets and thus has operations in the emerging markets of the United Kingdom, Continental Europe, South America, Canada, Scandinavia, Asia, and Australia.
WRB boasts more than 60 straight quarters of favorable reserve development, given its prudent underwriting. Operational excellence supports it in maintaining a solid balance sheet with sufficient liquidity and strong cash flows.
Conclusion
The property and casualty insurer is set to grow on rate increases, reserving discipline, diversification benefits, momentum in international business, investment in alternative assets, and consistent cash flow.
Banking on consistent cash flow, W.R. Berkley has been hiking dividends since 2005, as well as paying special dividends apart from buying back shares. Its dividend yield of 0.5% appears attractive compared with the industry average of 0.2%, making it an attractive pick for yield-seeking investors.
Image: Bigstock
WRB Outperforms Industry, Trades at a Premium: How to Play the Stock
Key Takeaways
Shares of W.R. Berkley Corporation (WRB - Free Report) have gained 23.6% in the past year, outperforming its industry, the Finance sector, and the Zacks S&P 500 composite’s growth of 8.4%, 20.4% and 20.3%, respectively.
The insurer has a market capitalization of $26.78 billion. The average volume of shares traded in the last three months was 1.8 million.
The insurer has a solid track record of beating earnings estimates in three of the last four quarters and matching in one, the average being 5.81%.
Image Source: Zacks Investment Research
WRB Shares are Expensive
WRB shares are trading at a premium to the industry. Its price-to-book value of 2.88X is higher than the industry average of 1.42X.
Other insurers, such as Arch Capital Group Ltd. (ACGL - Free Report) , The Travelers Companies, Inc. (TRV - Free Report) , and Cincinnati Financial Corporation (CINF - Free Report) , are also trading at a premium to the industry.
Image Source: Zacks Investment Research
WRB Trading Above 200-Day Moving Averages
Shares of W.R. Berkley closed at $70.63 on Friday, near its 52-week high of $76.38. This proximity underscores investor confidence. It has the ingredients for further price appreciation. The stock is trading above the 200-day simple moving average (SMA) of $65.40, indicating solid upward momentum. SMA is a widely used technical analysis tool to predict future price trends by analyzing historical price data.
Image Source: Zacks Investment Research
WRB’s Encouraging Growth Projection
The Zacks Consensus Estimate for W.R. Berkley’s 2025 earnings per share indicates a year-over-year increase of 2.1%. The consensus estimate for revenues is pegged at $14.60 billion, implying a year-over-year improvement of 8%.
The consensus estimate for 2026 earnings per share and revenues indicates an increase of 11.1% and 6.6%, respectively, from the corresponding 2025 estimates.
Notably, earnings grew 27.8% in the past five years, better than the industry average of 20.9%.
WRB’s Favorable Return on Capital
Return on equity for the trailing 12 months was 18.8%, which compared favorably with the industry’s 7.6%. This reflects its efficiency in utilizing shareholders’ funds.
Also, return on invested capital (ROIC) has been increasing over the last few quarters while the company raised its capital investment over the same time frame. This reflects WRB’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 8.8%, better than the industry average of 5.8%.
Key Drivers of WRB Stock
As part of its growth strategy, WRB has been focusing on commercial lines, including excess and surplus lines, admitted lines, and specialty personal lines, where it also has a competitive advantage.
WRB’s insurance business, which contributes the lion’s share to net premium written, is poised to grow on the strength of several new startup units in varied business lines, expansion of international business that offers diversification benefits, rate increase, market dislocations, and high retention.
WRB remains focused on expanding selectively in attractive global markets and thus has operations in the emerging markets of the United Kingdom, Continental Europe, South America, Canada, Scandinavia, Asia, and Australia.
WRB boasts more than 60 straight quarters of favorable reserve development, given its prudent underwriting. Operational excellence supports it in maintaining a solid balance sheet with sufficient liquidity and strong cash flows.
Conclusion
The property and casualty insurer is set to grow on rate increases, reserving discipline, diversification benefits, momentum in international business, investment in alternative assets, and consistent cash flow.
Banking on consistent cash flow, W.R. Berkley has been hiking dividends since 2005, as well as paying special dividends apart from buying back shares. Its dividend yield of 0.5% appears attractive compared with the industry average of 0.2%, making it an attractive pick for yield-seeking investors.
Given the premium valuation, it is better to stay cautious about this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.