AXIS Capital Holdings Limited (AXS - Free Report) remains well poised for growth, banking on wise acquisitions, organic growth strategies and a robust capital position. The Zacks Rank #3 (Hold) property and casualty insurer holds immense potential owing to a few good growth drivers.
Growth Projections: The Zacks Consensus Estimate for earnings per share is $4.03 for 2017 and $4.88 for 2018. Though the estimate for 2017 reflects a year-over-year decline of 10.0%, the same for 2018 will rebound to nearly 21% growth. Revenues for both 2017 and 2018 are expected to inch up about 1.3% and 1.6%, respectively.
The expected long-term earnings growth is pegged at 8.5%.
Northbound Estimates: The Zacks Consensus Estimate for 2017 has increased 2.3% over the last 60 days.
Price Performance: Shares of AXIS Capital have gained 6.6% in a year, underperforming the industry’s rally of 21.1%.
Positive Earnings Surprise History: AXIS Capital has surpassed the Zacks Consensus Estimate in three of the last four quarters with an average beat of 15.7%.
Shares Underpriced: Looking at the company’s price-to-book ratio — the best multiple for valuing insurers because of large variations in their earnings results from one quarter to the next — shares are underpriced at the current level. The company has a trailing 12-month P/B ratio of 0.9, falling significantly below the industry average of 1.5. Undervalued shares with growth prospects are best investment bets.
VGM Score: AXIS Capital carries a VGM Score of B. Here V stands for Value, G for Growth and M for Momentum with the score being a weighted combination of all three factors.
Growth Drivers in Place
AXIS Capital has been generating an improved top line owing to rise in net premiums earned and higher investment income. With already two hikes made this year and one more expected, investment income should continue to increase.
AXIS Capital continues to build on Specialty Insurance, Reinsurance and Accident and Health segments to pave way for long-term growth. The company has intensified focus on casualty and professional lines in the insurance segment, motor and reinsurance in particular.
The company’s Lloyds platform is exhibiting better performances. To consolidate its presence there, AXIS Capital increased the offer price to acquire Novae Group plc. With this acquisition, the company will be among the top 10 insurers’ bracket at Lloyds. This also signifies a solid inorganic growth story for AXIS Capital.
A strong capital position aids the company to return value to shareholders through regular dividend hikes and buybacks. The company has successfully returned to shareholders in excess of 100% of aggregate operating income. AXIS Capital intends to pay back at least 200% of six months’ operating earnings to investors unless the company finds other means of capital deployment.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Atlas Financial Holdings, Inc. (AFH - Free Report) , Markel Corporation (MKL - Free Report) and Mercury General Corporation (MCY - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Atlas Financial Holdings engages in underwriting commercial automobile insurance policies in the United States. The company delivered positive surprises in two of the last four quarters with an average beat of 57.94%
Markel Corporation markets and underwrites specialty insurance products in the United States and internationally. The company delivered positive surprises in two of the last four quarters with an average beat of 21.06%.
Mercury General Corporation engages in writing personal automobile insurance in the United States. The company delivered positive surprises in three of the trailing four quarters with an average beat of 1.06%.
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