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Axis Capital (AXS) Down 6.3% Since Earnings Report: Can It Rebound?

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A month has gone by since the last earnings report for Axis Capital Holdings Limited (AXS - Free Report) . Shares have lost about 6.3% in the past month, underperforming the market.

Will the recent negative trend continue leading up to the stock's next earnings release, or is it due for a breakout? 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 catalysts.

AXIS Capital Holdings Beats on Q2 Earnings, Revenues

AXIS Capital Holdings Limited reported second-quarter 2017 earnings of $1.31 per share that surpassed the Zacks Consensus Estimate by nearly 4%. Also, earnings skyrocketed 157% from the year-ago quarter.

Including net realized investment losses of 5 cents, foreign exchange losses of $0.43, and bargain purchase gain of $0.18, net income came in at $1.01per share, down about 22% year over year.

Operational Update

Operating revenues of about $1.09 billion beat the Zacks Consensus Estimate of $1.05 million. Revenues increased 5% year over year.

Gross premiums written increased 3% year over year to about $1.4 billion. The improvement was driven by 6% higher premiums written in the Reinsurance segment and 2% higher premiums written in the Insurance segment.

Net investment income increased 16% year over year to $106 million driven bychange in fair value of alternative investments.

Total expense in the quarter increased 9% year over year to $1 billion due to higher acquisition costs and administrative expenses.

AXIS Capital’s underwriting income increased nearly six folds year over year to $57 million. Combined ratio improved 460 basis points (bps) to 97.6%. Catastrophe and weather-related pre-tax net losses were $41 million compared with $49 million in the year-ago quarter.

Segment Results

Insurance: Gross premiums written increased 2% year over year to $796 million owing to the acquisition of the aviation business of Aviael and a better performing liability line of business.

Net premiums earned increased 3% year over year to $493 million on premium growth in accident, health and property lines.

Underwriting loss of $0.5 million narrowed from the year-ago loss of $11.4 million. Combined ratio improved 30 bps to 100.2%.

Reinsurance: Gross premiums written in the quarter increased 6% year over year to $566 million, largely due to a higher level of premiums in the motor, catastrophe and property lines partially offset by a decline in the agriculture line.

Net premiums earned decreased 4% year over year to $487.6 million on premium growth in the agriculture line.

Underwriting income of $57.4 million increased from $21.2 million in the year-ago quarter. Combined ratio improved 710 bps year over year to 97.6%.

Financial Update

AXIS Capital exited the quarter with cash and cash equivalents of $728 million, down 30% from the 2016-end level.

Cash flow from operation was $185 million compared with $77 million in the year-ago quarter.

As of Jun 30, 2017, diluted book value per share was $60.45, up 5% year over year.

Operating return on equity was 8.6% compared with 3.6% in year-ago quarter.

Share Repurchase and Dividend Update

The company repurchased 2 million shares for $131 million. AXIS Capital has $739 million remaining authorization under the common share repurchase program up to Dec 31, 2017. But it has been suspended due to the acquisition of Novae.

The company declared a dividend of 38 cents per common share.

How Have Estimates Been Moving Since Then?

Analysts were quiet during the past month as none of them issued any earnings estimate revisions.

VGM Scores

At this time, Axis Capital's stock has a subpar Growth Score of D, however its Momentum is doing a lot better with a B. Charting a same path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Our style scores indicate that the stock is suitable for value and momentum investors.


Notably, the stock has a Zacks Rank #3 (Hold). We are expecting an inline return from the stock in the next few months.

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