Back to top

Here's Why You Must Add AXIS Capital (AXS) to Your Portfolio

Read MoreHide Full Article

Estimates for AXIS Capital Holdings Limited (AXS - Free Report) have been revised upward over the past 60 days, reflecting analysts’ confidence in the stock. The stock has seen the Zacks Consensus Estimate for 2018 and 2019 earnings being raised 9.2% and 4.8% to $4.52 and $5, respectively.

AXIS Capital is a global provider of specialty lines insurance and treaty reinsurance. Shares of this Zacks Rank #1 (Strong Buy) property and casualty insurer have rallied nearly 15% against the industry's decline of 0.5%.



The company continues to build on its Specialty Insurance, Reinsurance plus Accident and Health to pave the way for long-term growth. The expected long-term earnings growth for the stock is pegged at 8.5%.

Let’s focus on the factors that make AXIS Capital a stock to add to the investors’ portfolio for garnering greater returns.

Improving Top Line: AXIS Capital’s rising revenues is attributable to higher net premiums earned as well as investment income. Augmenting portfolio mix, improving underwriting profitability and strengthening focus on casualty and professional lines in the insurance segment, particularly motor and reinsurance, should continue to inflate premiums. Progressing rate environment mirroring economic boom should also aid investment income.

Compelling Inorganic Story: AXIS Capital pursues strategic acquisitions to ramp up its premium growth profile, make geographical expansion, diversify portfolio as well as add capabilities to the existing one. The buyout of Novae Group places the acquirer among the top 10 insurers’ bracket at Lloyd and helps achieve cost savings of more than $100 million by year-end 2020. The Aviabel acquisition boosts its current airline business.

Effective Capital Deployment: AXIS Capital has a sturdy capital management policy in place. Over the past five years, the company returned in excess of 100% of aggregate operating income to shareholders through dividends and share repurchases.

Going forward, the company intends to pay back at least 200% of its six months operating earnings to investors. Its 2.7% dividend yield exceeds the industry average of 2.2%, making it an attractive pick for yield-seeking investors.

Growth Projections: The Zacks Consensus Estimate for current-year earnings per share is pegged at $4.52, representing a staggering year-over-year increase of 234.5% on 24.2% higher revenues of $5.7 billion.

For 2019, the consensus mark for the bottom line stands at $5 on $5.6 billion revenues. The bottom line represents a 10.5% year-over-year rise.

AXIS Capital has expected long-term earnings per share growth of 8.5%.

Positive Earnings Surprise History: The company shows a decent earnings surprise history, exceeding the Zacks Consensus Estimate in two of the last four quarters with an average beat of 5.11%.

Attractive Valuation: Shares are trading at a price to book multiple of 1.07, lower than the industry average of 1.42.  Price to book is the best multiple to value insurers because of large variations in their earnings results from one quarter to the next.

Other Stocks to Consider

Investors interested in the insurance industry can also check out other top-ranked stocks like Alleghany Corp. (Y - Free Report) , Markel Corp. (MKL - Free Report) and RLI Corp. (RLI - Free Report) .  

Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. It pulled off an average four-quarter positive surprise of 17.61%. The stock sports a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

Markel markets and underwrites specialty insurance products in the United States, the United Kingdom, Canada and globally. The company came up with positive surprises in the last four quarters, the average beat being 15.54%. The stock carries a Zacks Rank #2 (Buy).

RLI Corp. underwrites property and casualty insurance in the United States and internationally. The company delivered an average four-quarter positive earnings surprise of 33.65%. The stock holds a Zacks Rank of 2.

More Stock News: This Is Bigger than the iPhone!

It could become the mother of all technological revolutions. Apple sold a mere 1 billion iPhones in 10 years but a new breakthrough is expected to generate more than 27 billion devices in just 3 years, creating a $1.7 trillion market.

Zacks has just released a Special Report that spotlights this fast-emerging phenomenon and 6 tickers for taking advantage of it. If you don't buy now, you may kick yourself in 2020.

Click here for the 6 trades >>



More from Zacks Analyst Blog

You May Like