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RLI Stock Moves Above 50 Day SMA: Buy, Sell or Stay Invested?
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Key Takeaways
RLI stock trades above its 50-day SMA, signaling bullish momentum after recent underperformance.
The company benefits from product diversification, underwriting discipline and a strong branch network.
RLI offers steady dividends with 50 years of hikes, but valuation remains high versus industry peers.
Shares of RLI Corp. (RLI - Free Report) have gained momentum. The stock is trading above its 50-day simple moving average (SMA), signaling a bullish trend. The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. These are considered particularly important as they are the first markers of an uptrend or downtrend.
Based on short-term price targets offered by four analysts, the Zacks average price target is $69.25 per share. The average suggests a potential 7.3% upside from the last closing price.
RLI Trading Above 50-Day SMA
Image Source: Zacks Investment Research
RLI shares have lost 21.6% in a year, underperforming the industry’s growth of 11%. Nonetheless, this specialty property-casualty (P&C) underwriter that caters primarily to niche markets is poised to grow on a strong local branch office network, a broad range of product offerings, a focus on specialty insurance lines and an impressive record of underwriting profits.
RLI vs Industry in a Year
Image Source: Zacks Investment Research
W.R. Berkley Corporation (WRB - Free Report) and Cincinnati Financial Corp. (CINF - Free Report) , its peers, have gained 20.9% and 14.9% respectively in a year.
RLI Shares are Expensive
The stock is overvalued compared with its industry. It is currently trading at a price-to-book multiple of 3.14, lower than the industry average of 1.52 and the median of 1.37.
Image Source: Zacks Investment Research
RLI is relatively expensive compared to WRB and CINF.
The Case for RLI Stock
RLI continues to benefit from steady growth, driven by product diversification and a strong emphasis on innovation. Its broad and compelling product portfolio, along with a consistent focus on launching new offerings and re-underwriting existing products, supports solid business expansion. Sustained rate increases and a continually expanding distribution network further strengthen RLI’s ability to generate improved top-line growth over time.
Like many insurers, RLI remains exposed to catastrophe-related losses, which can introduce underwriting volatility inherent to its business model. However, the company mitigates this risk through a conservative underwriting and reserving approach. This disciplined strategy has enabled RLI to record favorable reserve releases from prior accident years, reflecting prudent risk management and claims handling practices.
Despite catastrophe exposure, RLI’s combined ratio—a key measure of underwriting profitability—has remained exemplary. Management continues to focus on enhancing underwriting performance, including exiting underperforming products within its property segment. These strategic actions demonstrate RLI’s commitment to maintaining underwriting discipline and long-term profitability.
RLI also stands out for its shareholder-friendly capital return strategy. The company has an exceptional dividend track record, having paid dividends for 190 consecutive quarters. It has increased its regular dividend for 50 straight years, with a five-year compound annual growth rate (2019–2024) of 8.8%. Its dividend yield of 1% exceeds the industry average of 0.3%, making the stock attractive for income-focused investors. Additionally, RLI has paid special dividends consistently since 2011.
From a financial strength perspective, RLI continues to reinforce its balance sheet through improved liquidity and leverage metrics. A solid capital structure supports policyholder obligations, enhances operational flexibility and contributes to long-term growth in book value. Improving profitability metrics further highlights this strength. Trailing 12-month return on equity reached 16.5%, significantly above the industry average of 8%. While return on invested capital has shown improvement, its trailing 12-month level of 2.1% still lags the industry average of 6.2%, indicating room for further efficiency gains.
Muted Analyst Sentiment
The Zacks Consensus Estimate for 2026 revenues indicates a 4.1% year-over-year increase, but earnings imply a 10.4% year-over-year decrease.
The consensus estimate for 2026 earnings witnessed no movement in the last 30 days.
While the consensus estimate for 2026 earnings of WRB moved two cents down in the last 30 days, that of CINF moved two cents north in the same time frame.
Parting Thoughts on RLI Shares
RLI is one of the industry’s most profitable P&C writers, with an impressive track record of delivering 29 consecutive years of underwriting profitability. A strong local branch office network, a broad range of product offerings and a focus on specialty insurance lines should continue to contribute to its superior profitability. The stock's impressive dividend history makes it an attractive pick for yield-seeking investors.
Image: Bigstock
RLI Stock Moves Above 50 Day SMA: Buy, Sell or Stay Invested?
Key Takeaways
Shares of RLI Corp. (RLI - Free Report) have gained momentum. The stock is trading above its 50-day simple moving average (SMA), signaling a bullish trend.
The 50-day SMA is a key indicator for traders and analysts to identify support and resistance levels. These are considered particularly important as they are the first markers of an uptrend or downtrend.
Based on short-term price targets offered by four analysts, the Zacks average price target is $69.25 per share. The average suggests a potential 7.3% upside from the last closing price.
RLI Trading Above 50-Day SMA
Image Source: Zacks Investment Research
RLI shares have lost 21.6% in a year, underperforming the industry’s growth of 11%. Nonetheless, this specialty property-casualty (P&C) underwriter that caters primarily to niche markets is poised to grow on a strong local branch office network, a broad range of product offerings, a focus on specialty insurance lines and an impressive record of underwriting profits.
RLI vs Industry in a Year
Image Source: Zacks Investment Research
W.R. Berkley Corporation (WRB - Free Report) and Cincinnati Financial Corp. (CINF - Free Report) , its peers, have gained 20.9% and 14.9% respectively in a year.
RLI Shares are Expensive
The stock is overvalued compared with its industry. It is currently trading at a price-to-book multiple of 3.14, lower than the industry average of 1.52 and the median of 1.37.
Image Source: Zacks Investment Research
RLI is relatively expensive compared to WRB and CINF.
The Case for RLI Stock
RLI continues to benefit from steady growth, driven by product diversification and a strong emphasis on innovation. Its broad and compelling product portfolio, along with a consistent focus on launching new offerings and re-underwriting existing products, supports solid business expansion. Sustained rate increases and a continually expanding distribution network further strengthen RLI’s ability to generate improved top-line growth over time.
Like many insurers, RLI remains exposed to catastrophe-related losses, which can introduce underwriting volatility inherent to its business model. However, the company mitigates this risk through a conservative underwriting and reserving approach. This disciplined strategy has enabled RLI to record favorable reserve releases from prior accident years, reflecting prudent risk management and claims handling practices.
Despite catastrophe exposure, RLI’s combined ratio—a key measure of underwriting profitability—has remained exemplary. Management continues to focus on enhancing underwriting performance, including exiting underperforming products within its property segment. These strategic actions demonstrate RLI’s commitment to maintaining underwriting discipline and long-term profitability.
RLI also stands out for its shareholder-friendly capital return strategy. The company has an exceptional dividend track record, having paid dividends for 190 consecutive quarters. It has increased its regular dividend for 50 straight years, with a five-year compound annual growth rate (2019–2024) of 8.8%. Its dividend yield of 1% exceeds the industry average of 0.3%, making the stock attractive for income-focused investors. Additionally, RLI has paid special dividends consistently since 2011.
From a financial strength perspective, RLI continues to reinforce its balance sheet through improved liquidity and leverage metrics. A solid capital structure supports policyholder obligations, enhances operational flexibility and contributes to long-term growth in book value. Improving profitability metrics further highlights this strength. Trailing 12-month return on equity reached 16.5%, significantly above the industry average of 8%. While return on invested capital has shown improvement, its trailing 12-month level of 2.1% still lags the industry average of 6.2%, indicating room for further efficiency gains.
Muted Analyst Sentiment
The Zacks Consensus Estimate for 2026 revenues indicates a 4.1% year-over-year increase, but earnings imply a 10.4% year-over-year decrease.
The consensus estimate for 2026 earnings witnessed no movement in the last 30 days.
While the consensus estimate for 2026 earnings of WRB moved two cents down in the last 30 days, that of CINF moved two cents north in the same time frame.
Parting Thoughts on RLI Shares
RLI is one of the industry’s most profitable P&C writers, with an impressive track record of delivering 29 consecutive years of underwriting profitability. A strong local branch office network, a broad range of product offerings and a focus on specialty insurance lines should continue to contribute to its superior profitability. The stock's impressive dividend history makes it an attractive pick for yield-seeking investors.
Given its expensive valuation, it is prudent to wait for a better entry point for this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.