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Everest Re (RE) Up 6.3% Since Last Earnings Report: Can It Continue?

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A month has gone by since the last earnings report for Everest Re (RE - Free Report) . Shares have added about 6.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Everest Re due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.

Everest Re Q3 Earnings Top Estimates, Revenues Up Y/Y

Everest Re Group, Ltd. delivered third-quarter 2019 operating net income per share of $3.39, beating the Zacks Consensus Estimate by 63.8%. The bottom line declined 17.2% year over year.

Both its reinsurance and insurance businesses witnessed growth in the quarter.

Operational Update

Everest Re’s total operating revenues of $2.1 billion increased 9% year over year. However, the top line missed the Zacks Consensus Estimate by 0.8%.

Gross written premiums improved 9% year over year to $2.4 billion. The company’s worldwide reinsurance premiums increased 3% year over year to $1.7 billion. Direct insurance premiums grew 29% to $666.6 million.

Net investment income came in at $181.1 million in the quarter under review, up 12% year over year.

Total claims and expenses increased 11.6% to $1.9 billion, attributable to higher incurred losses and loss adjustment expenses, commission, brokerage, taxes and fees, other underwriting expenses and corporate expenses.

Combined ratio deteriorated 140 basis points to 101.4%.

Financial Update

Everest Re Group exited the quarter with total investments and cash of $20.4 billion, up 10.5% from 2018 level. Shareholder equity at the end of the reported quarter increased 14.3% from 2018 end to nearly $9 billion.

Book value per share came in at $193.37 as of Sep 30, 2019, down 12.2% from 2018-end level.

Annualized net income return on equity was 13% in the first nine months of 2019.

Everest Re Group’s cash flow from operations was $1.5 billion in the first nine months of 2019, up more than threefold year over year.

The company bought back shares worth $24.6 million in the first nine months of 2019. The company still has 1.3 million shares remaining under its authorization.

 

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a downward trend in fresh estimates. The consensus estimate has shifted -39.93% due to these changes.

VGM Scores

Currently, Everest Re has a nice Growth Score of B, though it is lagging a lot on the Momentum Score front with a D. Charting a somewhat similar path, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Notably, Everest Re has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.


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