Everest Re Group, Ltd (RE - Free Report) appears to be well poised for growth, given its product diversification, higher investment income, solid capital position and financial flexibility.
Performance of the insurance segment has been stable for the past few years. This segment has witnessed growth on the back of initiatives like product diversification, staffing up of underwriting operations and expansion of the relationship between property and casualty. Premiums increased 21% in the first nine months of 2019.
The Reinsurance segment has also managed to outperform the broader market. Development of strategic partnerships, various product offerings, hedging abilities and distribution facilities aided the company in making the most of the opportunities, which drove segment growth. Premiums at this segment increased 3.3% in the first nine months of 2019.
This property and casualty insurer also witnessed an increase in investment income on the back of improvements in limited partnership investments and higher yields on fixed income portfolio.
Banking on solid capital position, financial flexibility and long-term operating performance, the company deploys capital effectively via share buyback and dividend payouts to enhance shareholders value. The company has been hiking dividend each year (CAGR of 23.9% from 2013 to 2018). Also, share buybacks boost the bottom line. Everest Re’s dividend yield of 2.3% compares favorably with the industry average of 0.4%. These endeavors make the stock an attractive pick for yield-seeking investors.
The stock has a favorable Value Score of B and carries a Zacks Rank #2 (Buy). Back-tested results show that stocks with Value Score of A or B and a Zacks Rank #1 (Strong Buy) or 2 are best investment options. VGM Score helps to identify stocks with the most attractive value, best growth and the most promising momentum.
Estimates for Everest Re Group have been revised upward over the past 60 days, reflecting analysts’ confidence in the stock. The Zacks Consensus Estimate for 2020 earnings per share has moved up 1.3% in the said time frame.
The company has a decent earnings surprise history. It beat estimates in each of the trailing four quarters, with the average being 28.30%.
Shares of Everest Re Group have rallied 29% in a year’s time, outperforming the industry’s growth of 15.2%.
The Zacks Consensus Estimate for 2019 and 2020 earnings per share is pegged at $21.95 and $24.07, indicating increase of nearly 372% and 9.7%, respectively from the year-ago reported figure. The expected long-term earnings growth rate is 10%. It has a favorable Growth Score of B. This style score identifies growth prospects of a company.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry include Markel Corporation (MKL - Free Report) , Alleghany Corporation (Y - Free Report) and RenaissanceRe Holdings (RNR - Free Report) . While Markel sports a Zacks Rank #1, Alleghany and RenaissanceRe carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.
Markel is a diverse financial holding company. It markets and underwrites specialty insurance products in the United States, the United Kingdom, Canada, and internationally. The company beat earnings estimates in two of the last four reported quarters, the average positive surprise being 17.05%.
Alleghany Corporation provides property and casualty reinsurance and insurance products in the United States and internationally. The company came up with average four-quarter positive surprise of 25.37%.
RenaissanceRe Holdings provides insurance and reinsurance products in the United States and Internationally. The company beat earnings estimates in three of the last four reported quarters, the average positive surprise being 23.27%.
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