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Selective Insurance (SIGI) Up 52% in a Year: What's Driving It?
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Shares of Selective Insurance Group (SIGI - Free Report) have gained 52.3% in a year compared with the industry's and the Finance sector’s rally of 41.6% and 48.9%, respectively. The Zacks S&P 500 composite has increased 42.4% in the said time frame. With a market capitalization of $4.8 billion, average volume of shares traded in the last three months was 0.2 million.
In fact, the shares scaled a 52-week high in the last trading session. The company noted that its stock has outperformed peers and equity markets over the last decade.
Image Source: Zacks Investment Research
Strong renewal pure pricing, higher retention in Commercial Lines and solid new business growth in the E&S segment are likely to continue aiding Selective Insurance. The company has a decent earnings surprise record. It has beat earnings estimates in three of the trailing four quarters and missed once, the average surprise being 35.12%.
Return on equity in the trailing 12 months was 12.5%, better than the industry average of 5.6%. This highlights the company’s efficiency in utilizing shareholders’ fund. It has a solid tracks record of delivering double digit operating ROE for straight seven years (averaging 11.5%), outperforming cost of capital and peer group averages.
The Zacks Consensus Estimate for 2021 and 2022 earnings has moved up 15.1% and 5.7%, respectively, in the past 60 days, reflecting analysts’ optimism.
Will the Bull Run Continue?
The Zacks Consensus Estimate for 2021 indicates year-over-year improvement of 28.9% on 11.4% higher revenues. The expected long-term earnings growth rate is pegged at 9.5%.
The company’s Commercial Lines, which accounts for the maximum chunk of net premium written, is likely to continue gaining from strong new business growth and retention, and accelerating renewal pure price increases.
The Zacks Rank #1 (Strong Buy) writer of mainly low-to-medium hazard risks stays focused on improving its organic growth, with its Commercial Lines business increasing share of distribution partners' overall premium to 12%, appointing new distribution partners to achieve a 25% agent market share and expanding it to new states.
Given prudent underwriting, it estimates combined ratio, excluding catastrophe losses, to be 90 in 2021, improving from the prior guidance of 91. Focused on managing expenses, the company expects expense ratio improvement in 2021 and the next couple years.
The company’s lower risk profile is supported by prudent reinsurance program, conservative investment portfolio, and disciplined reserving practice that in turn helps it in maintaining a sturdy balance sheet.
Riding on a solid capital position, the company has been hiking dividends, which witnessed a five-year CAGR (2015-2020) of nearly 12.3%. In fact, it has $96.6 million remaining under its share buyback authorization. Its dividend yield of 1.3% appears attractive compared with the industry average of 0.4% making it an attractive pick for yield-seeking investors.
Cincinnati Financial delivered an earnings surprise of 30.48% in the last-reported quarter.
W.R. Berkley delivered an earnings surprise of 27.59% in the last-reported quarter.
Alleghany delivered an earnings surprise of 110.97% in the last-reported quarter.
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Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
Image: Bigstock
Selective Insurance (SIGI) Up 52% in a Year: What's Driving It?
Shares of Selective Insurance Group (SIGI - Free Report) have gained 52.3% in a year compared with the industry's and the Finance sector’s rally of 41.6% and 48.9%, respectively. The Zacks S&P 500 composite has increased 42.4% in the said time frame. With a market capitalization of $4.8 billion, average volume of shares traded in the last three months was 0.2 million.
In fact, the shares scaled a 52-week high in the last trading session. The company noted that its stock has outperformed peers and equity markets over the last decade.
Strong renewal pure pricing, higher retention in Commercial Lines and solid new business growth in the E&S segment are likely to continue aiding Selective Insurance. The company has a decent earnings surprise record. It has beat earnings estimates in three of the trailing four quarters and missed once, the average surprise being 35.12%.
Return on equity in the trailing 12 months was 12.5%, better than the industry average of 5.6%. This highlights the company’s efficiency in utilizing shareholders’ fund. It has a solid tracks record of delivering double digit operating ROE for straight seven years (averaging 11.5%), outperforming cost of capital and peer group averages.
The Zacks Consensus Estimate for 2021 and 2022 earnings has moved up 15.1% and 5.7%, respectively, in the past 60 days, reflecting analysts’ optimism.
Will the Bull Run Continue?
The Zacks Consensus Estimate for 2021 indicates year-over-year improvement of 28.9% on 11.4% higher revenues. The expected long-term earnings growth rate is pegged at 9.5%.
The company’s Commercial Lines, which accounts for the maximum chunk of net premium written, is likely to continue gaining from strong new business growth and retention, and accelerating renewal pure price increases.
The Zacks Rank #1 (Strong Buy) writer of mainly low-to-medium hazard risks stays focused on improving its organic growth, with its Commercial Lines business increasing share of distribution partners' overall premium to 12%, appointing new distribution partners to achieve a 25% agent market share and expanding it to new states.
Given prudent underwriting, it estimates combined ratio, excluding catastrophe losses, to be 90 in 2021, improving from the prior guidance of 91. Focused on managing expenses, the company expects expense ratio improvement in 2021 and the next couple years.
The company’s lower risk profile is supported by prudent reinsurance program, conservative investment portfolio, and disciplined reserving practice that in turn helps it in maintaining a sturdy balance sheet.
Riding on a solid capital position, the company has been hiking dividends, which witnessed a five-year CAGR (2015-2020) of nearly 12.3%. In fact, it has $96.6 million remaining under its share buyback authorization. Its dividend yield of 1.3% appears attractive compared with the industry average of 0.4% making it an attractive pick for yield-seeking investors.
Other Stocks to Consider
Some other top-ranked stocks worth considering include Cincinnati Financial Corporation (CINF - Free Report) , Kinsale Capital Group (KNSL - Free Report) and Alleghany , each carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Cincinnati Financial delivered an earnings surprise of 30.48% in the last-reported quarter.
W.R. Berkley delivered an earnings surprise of 27.59% in the last-reported quarter.
Alleghany delivered an earnings surprise of 110.97% in the last-reported quarter.
Bitcoin, Like the Internet Itself, Could Change Everything
Blockchain and cryptocurrency has sparked one of the most exciting discussion topics of a generation. Some call it the “Internet of Money” and predict it could change the way money works forever. If true, it could do to banks what Netflix did to Blockbuster and Amazon did to Sears. Experts agree we’re still in the early stages of this technology, and as it grows, it will create several investing opportunities.
Zacks’ has just revealed 3 companies that can help investors capitalize on the explosive profit potential of Bitcoin and the other cryptocurrencies with significantly less volatility than buying them directly.
See 3 crypto-related stocks now >>