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AXIS Capital Rallies 38% YTD: Can the Stock Retain the Momentum?
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Shares of AXIS Capital Holdings (AXS - Free Report) have rallied 38.4% year to date, compared with the industry’s increase of 26.2%, the Finance sector’s rise of 13.4% and the Zacks S&P 500 composite’s rise of 18.2%. With a market capitalization of $2.8 billion, the average volume of shares traded in the last three months was 0.5 million.
A compelling and diversified product portfolio, underwriting excellence, digital capabilities and solid capital position continue to drive the Zacks Rank #1 (Strong Buy) specialty and global reinsurer. It has a VGM Score of A.
AXS Outperforms Industry, Sector, S&P 500
Image Source: Zacks Investment Research
AXS Witnessing Northbound Estimate Revision
All four analysts covering the stock raised estimates for the current and next year. The Zacks Consensus Estimate for Axis Capital’s 2024 and 2025 earnings has moved 6.9% and 5.1% north, respectively, in the past 30 days, reflecting analyst optimism.
Factors Acting in Favor of AXS
AXIS Capital envisions being a leading specialty underwriter and thus focuses on growth areas, including wholesale insurance and lower middle markets.
Its exit from the volatile catastrophe and property reinsurance space and reducing risk exposure while concentrating on accident and health, excess and supply property, casualty, credit and surety, and specialty reinsurance lines bodes well for growth.
The Insurance segment is poised to benefit from a diversified portfolio of global specialty businesses, leadership positions and growth opportunities across major business lines. This segment has been doing well over the last several years. Net premiums written (NPW) have been growing and we expect the 2026 NPW to increase at a three-year CAGR of 7.6%.
The Reinsurance business should benefit from strong cycle management, focusing on improving the business mix. We expect the 2026 NPW to increase at a three-year CAGR of 9.1%.
AXIS Capital is also working with its distribution partners to use expanding digital capabilities to create new business growth in desirable smaller accounts. This, coupled with simplifying operating structure, delivering efficiencies and capitalizing on productivity gains, should help it achieve a general and administrative ratio of less than 11% by 2026.
Strategic initiatives have been driving improvement in its operating earnings over the past few years.
Optimistic Growth Projection for AXS
The Zacks Consensus Estimate for 2024 earnings is pegged at $10.70, indicating an increase of 8.6% on 7% higher revenues of $6.1 billion. The consensus estimate for 2025 earnings is pegged at $11.59, indicating an increase of 8.4% on 10% higher revenues of $6.7 billion.
The expected long-term earnings growth rate is pegged at 27.8%, better than the industry average of 11%. We expect 2026 EPS to witness a three-year CAGR of 9.4%.
Axis Capital’s Impressive Dividend History
Axis Capital's dividend track is impressive. It hiked its dividend for 18 straight years and currently yields 2.3%, way above the industry average of 0.3%. The insurer boasts one of the highest dividend yields among its peers.
AXS’ Return on Capital
AXS’ trailing 12-month return on equity is 19.7%, ahead of the industry average of 8%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
Also, the return on invested capital (ROIC) in the trailing 12 months was 11.1%, better than the industry average of 5.9%. Its ROIC has been increasing over the last few quarters amid capital investment made over the same time frame. This reflects the company’s efficiency in utilizing funds to generate income.
Axis Capital Shares Are Undervalued
AXS shares are trading at a price-to-book multiple of 1.3, lower than the industry average of 1.6.
Its pricing at a discount to the industry average gives a better entry point to investors. Also, it has a Value Score of A.
Heritage Insurance earnings surpassed estimates in three of the last four quarters and missed in one, the average beat being 49.15%. Year to date, HRTG has rallied 141.1%.
The Zacks Consensus Estimate for HRTG’s 2024 and 2025 earnings implies 10.3% and 18.1% year-over-year growth, respectively.
Mercury General's earnings surpassed estimates in each of the last four quarters, the average surprise being 3,539.06%. Year to date, MCY’s stock has surged 68.9%.
The Zacks Consensus Estimate for MCY’s 2024 and 2025 earnings indicates 1,233.3% and 50% year-over-year growth, respectively.
ProAssurance earnings surpassed estimates in two of the last four quarters and missed in the other two. Year to date, PRA’s stock has lost 1.1%.
The Zacks Consensus Estimate for PRA’s 2024 and 2025 earnings suggests 457.1% and 49.2% year-over-year growth, respectively.
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AXIS Capital Rallies 38% YTD: Can the Stock Retain the Momentum?
Shares of AXIS Capital Holdings (AXS - Free Report) have rallied 38.4% year to date, compared with the industry’s increase of 26.2%, the Finance sector’s rise of 13.4% and the Zacks S&P 500 composite’s rise of 18.2%. With a market capitalization of $2.8 billion, the average volume of shares traded in the last three months was 0.5 million.
A compelling and diversified product portfolio, underwriting excellence, digital capabilities and solid capital position continue to drive the Zacks Rank #1 (Strong Buy) specialty and global reinsurer. It has a VGM Score of A.
AXS Outperforms Industry, Sector, S&P 500
Image Source: Zacks Investment Research
AXS Witnessing Northbound Estimate Revision
All four analysts covering the stock raised estimates for the current and next year. The Zacks Consensus Estimate for Axis Capital’s 2024 and 2025 earnings has moved 6.9% and 5.1% north, respectively, in the past 30 days, reflecting analyst optimism.
Factors Acting in Favor of AXS
AXIS Capital envisions being a leading specialty underwriter and thus focuses on growth areas, including wholesale insurance and lower middle markets.
Its exit from the volatile catastrophe and property reinsurance space and reducing risk exposure while concentrating on accident and health, excess and supply property, casualty, credit and surety, and specialty reinsurance lines bodes well for growth.
The Insurance segment is poised to benefit from a diversified portfolio of global specialty businesses, leadership positions and growth opportunities across major business lines. This segment has been doing well over the last several years. Net premiums written (NPW) have been growing and we expect the 2026 NPW to increase at a three-year CAGR of 7.6%.
The Reinsurance business should benefit from strong cycle management, focusing on improving the business mix. We expect the 2026 NPW to increase at a three-year CAGR of 9.1%.
AXIS Capital is also working with its distribution partners to use expanding digital capabilities to create new business growth in desirable smaller accounts. This, coupled with simplifying operating structure, delivering efficiencies and capitalizing on productivity gains, should help it achieve a general and administrative ratio of less than 11% by 2026.
Strategic initiatives have been driving improvement in its operating earnings over the past few years.
Optimistic Growth Projection for AXS
The Zacks Consensus Estimate for 2024 earnings is pegged at $10.70, indicating an increase of 8.6% on 7% higher revenues of $6.1 billion. The consensus estimate for 2025 earnings is pegged at $11.59, indicating an increase of 8.4% on 10% higher revenues of $6.7 billion.
The expected long-term earnings growth rate is pegged at 27.8%, better than the industry average of 11%. We expect 2026 EPS to witness a three-year CAGR of 9.4%.
Axis Capital’s Impressive Dividend History
Axis Capital's dividend track is impressive. It hiked its dividend for 18 straight years and currently yields 2.3%, way above the industry average of 0.3%. The insurer boasts one of the highest dividend yields among its peers.
AXS’ Return on Capital
AXS’ trailing 12-month return on equity is 19.7%, ahead of the industry average of 8%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
Also, the return on invested capital (ROIC) in the trailing 12 months was 11.1%, better than the industry average of 5.9%. Its ROIC has been increasing over the last few quarters amid capital investment made over the same time frame. This reflects the company’s efficiency in utilizing funds to generate income.
Axis Capital Shares Are Undervalued
AXS shares are trading at a price-to-book multiple of 1.3, lower than the industry average of 1.6.
Its pricing at a discount to the industry average gives a better entry point to investors. Also, it has a Value Score of A.
Other Stocks to Consider
Some other top-ranked stocks from the insurance industry are Heritage Insurance (HRTG - Free Report) , Mercury General (MCY - Free Report) and ProAssurance Corporation (PRA - Free Report) , each sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.
Heritage Insurance earnings surpassed estimates in three of the last four quarters and missed in one, the average beat being 49.15%. Year to date, HRTG has rallied 141.1%.
The Zacks Consensus Estimate for HRTG’s 2024 and 2025 earnings implies 10.3% and 18.1% year-over-year growth, respectively.
Mercury General's earnings surpassed estimates in each of the last four quarters, the average surprise being 3,539.06%. Year to date, MCY’s stock has surged 68.9%.
The Zacks Consensus Estimate for MCY’s 2024 and 2025 earnings indicates 1,233.3% and 50% year-over-year growth, respectively.
ProAssurance earnings surpassed estimates in two of the last four quarters and missed in the other two. Year to date, PRA’s stock has lost 1.1%.
The Zacks Consensus Estimate for PRA’s 2024 and 2025 earnings suggests 457.1% and 49.2% year-over-year growth, respectively.