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Axis Capital (AXS) Up 4.1% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Axis Capital (AXS - Free Report) . Shares have added about 4.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Axis Capital 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.
AXIS Capital's Q1 Earnings Miss, Revenues Fall Y/Y
AXIS Capital Holdings Limited reported first-quarter 2020 operating loss of $1.94 per share, wider than the Zacks Consensus Estimate of a loss of $1.92 per share. Notably, the company had reported operating income of $1.24 per share in the prior-year quarter.
The company’s results were impacted by lower revenues and higher costs. The COVID-19 pandemic affected the results as well.
Operational Update
First-quarter operating revenues amounted to nearly $1.2 billion, down 6% year over year. The downside can primarily be attributed to lower premiums and decline in net investment income.
Gross premiums written plunged 5.9% year over year to $2.4 billion on account of14% fall in Reinsurance segment.
Net investment income declined 13.2% year over year to nearly $93.1 million. Total expenses in the quarter under review increased more than 10% year over year to $1.3 billion, attributable to higher net losses and loss expenses,and interest expense and financing costs.
AXIS Capital incurred underwriting loss of $196.8 million, which compared against the prior-year quarter’s underwriting income of $77.8 million. Combined ratio deteriorated 2290 basis points (bps) to 119.8%.
Segment Results
Insurance: Gross premiums written improved 10.5% year over year to $940.7 million owing to strong growth in professional lines, liability, property and marine lines, which benefited by new business and favorable rate changes.
Net premiums earned inched up 1% year over year to $562.1 million. Underwriting loss was $122.6 million against year-ago quarter’s income of $20.9 million. Combined ratio deteriorated 2530 bps to 121.9%.
Reinsurance: Gross premiums written in the first quarter declined 14% year over year to $1.5 billion, primarily owing to catastrophe, credit and surety, and property lines, which were impacted by non-renewals and lower line sizes.
Net premiums earned declined8.8% year over year to $526.6 million. The company reported underwriting loss of $74.1 million against the year-ago quarter’s income of $56.9 million. Combined ratio deteriorated 2130 bps year over year to 112.3%.
Financial Update
AXIS Capital exited the first quarter with cash and cash equivalents of $756 million, down 39.1% over the level at 2019 end.
Book value per share declined 5.8% year over year to $49.78 as of Mar 31, 2020.
Dividend Update
Concurrent with the earnings release, AXIS Capital announced a dividend of 41 cents per share in first-quarter 2020.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 7.33% due to these changes.
VGM Scores
At this time, Axis Capital has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Axis Capital has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.
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Axis Capital (AXS) Up 4.1% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Axis Capital (AXS - Free Report) . Shares have added about 4.1% in that time frame, underperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Axis Capital 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.
AXIS Capital's Q1 Earnings Miss, Revenues Fall Y/Y
AXIS Capital Holdings Limited reported first-quarter 2020 operating loss of $1.94 per share, wider than the Zacks Consensus Estimate of a loss of $1.92 per share. Notably, the company had reported operating income of $1.24 per share in the prior-year quarter.
The company’s results were impacted by lower revenues and higher costs. The COVID-19 pandemic affected the results as well.
Operational Update
First-quarter operating revenues amounted to nearly $1.2 billion, down 6% year over year. The downside can primarily be attributed to lower premiums and decline in net investment income.
Gross premiums written plunged 5.9% year over year to $2.4 billion on account of14% fall in Reinsurance segment.
Net investment income declined 13.2% year over year to nearly $93.1 million.
Total expenses in the quarter under review increased more than 10% year over year to $1.3 billion, attributable to higher net losses and loss expenses,and interest expense and financing costs.
AXIS Capital incurred underwriting loss of $196.8 million, which compared against the prior-year quarter’s underwriting income of $77.8 million. Combined ratio deteriorated 2290 basis points (bps) to 119.8%.
Segment Results
Insurance: Gross premiums written improved 10.5% year over year to $940.7 million owing to strong growth in professional lines, liability, property and marine lines, which benefited by new business and favorable rate changes.
Net premiums earned inched up 1% year over year to $562.1 million.
Underwriting loss was $122.6 million against year-ago quarter’s income of $20.9 million. Combined ratio deteriorated 2530 bps to 121.9%.
Reinsurance: Gross premiums written in the first quarter declined 14% year over year to $1.5 billion, primarily owing to catastrophe, credit and surety, and property lines, which were impacted by non-renewals and lower line sizes.
Net premiums earned declined8.8% year over year to $526.6 million.
The company reported underwriting loss of $74.1 million against the year-ago quarter’s income of $56.9 million. Combined ratio deteriorated 2130 bps year over year to 112.3%.
Financial Update
AXIS Capital exited the first quarter with cash and cash equivalents of $756 million, down 39.1% over the level at 2019 end.
Book value per share declined 5.8% year over year to $49.78 as of Mar 31, 2020.
Dividend Update
Concurrent with the earnings release, AXIS Capital announced a dividend of 41 cents per share in first-quarter 2020.
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 7.33% due to these changes.
VGM Scores
At this time, Axis Capital has a poor Growth Score of F, however its Momentum Score is doing a lot better with an A. However, the stock was allocated a grade of D on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of D. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. Notably, Axis Capital has a Zacks Rank #5 (Strong Sell). We expect a below average return from the stock in the next few months.