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Reasons Why AXIS Capital (AXS) Stock is an Attractive Pick Now
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AXIS Capital Holdings Limited (AXS - Free Report) has been favored by investors on the back of an increase in lines of business, new business growth, continued strong retentions and prudent capital deployment.
Growth Projections
The Zacks Consensus Estimate for AXIS Capital’s 2023 earnings is pegged at $8.22 per share, indicating a 41.4% increase from the year-ago reported figure on 7.9% higher revenues of $5.72 billion. The consensus estimate for 2024 earnings is pegged at $9.24 per share, indicating a 12.4% increase from the year-ago reported figure on 6.9% higher revenues of $6.12 billion. The expected long-term earnings growth rate is 5%.
Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 has moved 0.4% and 0.7% north, respectively, in the past seven days. This should instill investors' confidence in the stock.
Earnings Surprise History
AXS has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in one, with the average being 9.75%.
Zacks Rank & Price Performance
AXIS Capital currently sports a Zacks Rank #1 (Strong Buy). The stock has gained 2.2% in the past year compared with the industry’s growth of 14.3%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
AXIS Capital’s annualized operating return on average common equity was 18.3%, which expanded 370 basis points year over year. The increase was primarily due to a rise in net investment income and underwriting income and a decrease in average common shareholder's equity. It was partially offset by an increase in income tax expense. ROE is a profitability measure that shows how efficiently the company is utilizing shareholders’ money.
Style Score
AXIS Capital has a VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Back-tested results show that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy) offer the best opportunities in the value investing space.
Business Tailwinds
AXIS Capital remains poised to gain from repositioning of the portfolio and markets offering profitable growth, lower volatility, strong market presence, better pricing as well as margin expansion. Pricing improved in virtually every line of business, with many lines continuing to witness strong double-digit increases. AXIS Capital expects disciplined pricing to persist in both insurance and reinsurance in 2023.
The Insurance segment should continue to gain from favorable market conditions, increased new business opportunities, rate increases on renewal and continued strong retentions.
The Reinsurance segment is expected to benefit from an increase in accident and health, motor, catastrophe and credit and surety lines. It will also gain from increases in liability and professional lines owing to premium adjustments, primarily related to favorable market conditions, new business growth and increased rates on business in North America and Global Markets.
Given the duration of the portfolio and current market yields, AXIS Capital expects net investment income from fixed maturities to be more than $150 million in 2023. Riding on increasing yields, net investment income increased 47.4% year over year in the first half of 2023.
The property and casualty insurer has an impressive dividend history, boasting one of the highest dividend yields among its peers. It hiked dividends for the last 18 years at an eight-year CAGR (2015 – 2022) of 5.3%, driven by solid earnings. Its dividend yield is currently 3.1%, which is way above the industry average of 0.3%.
As of Jun 30, 2023, AXIS Capital had $100 million remaining authorization under the board-authorized share repurchase program for common share repurchases through Dec 31, 2023.
Attractive Valuation
AXS shares are trading at a price to book value multiple of 1.05, lower than the industry average of 1.49. It also has an impressive Value Score of B. This style score helps find the most attractive value stocks.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 14.88%. In the past year, KNSL has gained 33.1%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $11.16 and $13.64, indicating a year-over-year increase of 43% and 22.1%, respectively.
Arch Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 26.83%. In the past year, ACGL has gained 62.8%.
The Zacks Consensus Estimate for ACGL’s 2023 and 2024 earnings per share is pegged at $6.58 and $7.25, indicating a year-over-year increase of 35.1% and 10.2%, respectively.
RLI Corp. has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 31.14%. In the past year, RLI has gained 14.9%.
The Zacks Consensus Estimate for RLI’ 2023 and 2024 earnings per share is pegged at $5.08 and $5.37, indicating a year-over-year increase of 8.3% and 5.8%, respectively.
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Reasons Why AXIS Capital (AXS) Stock is an Attractive Pick Now
AXIS Capital Holdings Limited (AXS - Free Report) has been favored by investors on the back of an increase in lines of business, new business growth, continued strong retentions and prudent capital deployment.
Growth Projections
The Zacks Consensus Estimate for AXIS Capital’s 2023 earnings is pegged at $8.22 per share, indicating a 41.4% increase from the year-ago reported figure on 7.9% higher revenues of $5.72 billion. The consensus estimate for 2024 earnings is pegged at $9.24 per share, indicating a 12.4% increase from the year-ago reported figure on 6.9% higher revenues of $6.12 billion.
The expected long-term earnings growth rate is 5%.
Estimate Revision
The Zacks Consensus Estimate for 2023 and 2024 has moved 0.4% and 0.7% north, respectively, in the past seven days. This should instill investors' confidence in the stock.
Earnings Surprise History
AXS has a decent earnings surprise history. It beat estimates in three of the last four quarters and missed in one, with the average being 9.75%.
Zacks Rank & Price Performance
AXIS Capital currently sports a Zacks Rank #1 (Strong Buy). The stock has gained 2.2% in the past year compared with the industry’s growth of 14.3%.
Image Source: Zacks Investment Research
Return on Equity (ROE)
AXIS Capital’s annualized operating return on average common equity was 18.3%, which expanded 370 basis points year over year. The increase was primarily due to a rise in net investment income and underwriting income and a decrease in average common shareholder's equity. It was partially offset by an increase in income tax expense. ROE is a profitability measure that shows how efficiently the company is utilizing shareholders’ money.
Style Score
AXIS Capital has a VGM Score of B. VGM Score helps identify stocks with the most attractive value, best growth and the most promising momentum.
Back-tested results show that stocks with a VGM Score of A or B, when combined with a Zacks Rank #1 or 2 (Buy) offer the best opportunities in the value investing space.
Business Tailwinds
AXIS Capital remains poised to gain from repositioning of the portfolio and markets offering profitable growth, lower volatility, strong market presence, better pricing as well as margin expansion. Pricing improved in virtually every line of business, with many lines continuing to witness strong double-digit increases. AXIS Capital expects disciplined pricing to persist in both insurance and reinsurance in 2023.
The Insurance segment should continue to gain from favorable market conditions, increased new business opportunities, rate increases on renewal and continued strong retentions.
The Reinsurance segment is expected to benefit from an increase in accident and health, motor, catastrophe and credit and surety lines. It will also gain from increases in liability and professional lines owing to premium adjustments, primarily related to favorable market conditions, new business growth and increased rates on business in North America and Global Markets.
Given the duration of the portfolio and current market yields, AXIS Capital expects net investment income from fixed maturities to be more than $150 million in 2023. Riding on increasing yields, net investment income increased 47.4% year over year in the first half of 2023.
The property and casualty insurer has an impressive dividend history, boasting one of the highest dividend yields among its peers. It hiked dividends for the last 18 years at an eight-year CAGR (2015 – 2022) of 5.3%, driven by solid earnings. Its dividend yield is currently 3.1%, which is way above the industry average of 0.3%.
As of Jun 30, 2023, AXIS Capital had $100 million remaining authorization under the board-authorized share repurchase program for common share repurchases through Dec 31, 2023.
Attractive Valuation
AXS shares are trading at a price to book value multiple of 1.05, lower than the industry average of 1.49. It also has an impressive Value Score of B. This style score helps find the most attractive value stocks.
Other Stocks to Consider
Some other top-ranked stocks from the property and casualty insurance industry are Kinsale Capital Group, Inc. (KNSL - Free Report) , Arch Capital Group Ltd. (ACGL - Free Report) and RLI Corp. (RLI - Free Report) , each sporting a Zacks Rank #1 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 14.88%. In the past year, KNSL has gained 33.1%.
The Zacks Consensus Estimate for KNSL’s 2023 and 2024 earnings per share is pegged at $11.16 and $13.64, indicating a year-over-year increase of 43% and 22.1%, respectively.
Arch Capital has a solid track record of beating earnings estimates in each of the last trailing four quarters, the average being 26.83%. In the past year, ACGL has gained 62.8%.
The Zacks Consensus Estimate for ACGL’s 2023 and 2024 earnings per share is pegged at $6.58 and $7.25, indicating a year-over-year increase of 35.1% and 10.2%, respectively.
RLI Corp. has a solid track record of beating earnings estimates in three of the last four quarters and missing in one, the average being 31.14%. In the past year, RLI has gained 14.9%.
The Zacks Consensus Estimate for RLI’ 2023 and 2024 earnings per share is pegged at $5.08 and $5.37, indicating a year-over-year increase of 8.3% and 5.8%, respectively.