We use cookies to understand how you use our site and to improve your experience. This includes personalizing content and advertising. By pressing "Accept All" or closing out of this banner, you accept our Privacy Policy and Terms of Service, revised from time to time, and you consent to the use of all cookies and similar technologies and the sharing of information they collect with third parties. You can reject marketing cookies by pressing "Deny Optional," but we still use essential, performance, and functional cookies.
You are being directed to ZacksTrade, a division of LBMZ Securities and licensed broker-dealer. ZacksTrade and Zacks.com are separate companies. The web link between the two companies is not a solicitation or offer to invest in a particular security or type of security. ZacksTrade does not endorse or adopt any particular investment strategy, any analyst opinion/rating/report or any approach to evaluating individual securities.
If you wish to go to ZacksTrade, click OK. If you do not, click Cancel.
Chubb Rises 7.4% but Lags Industry: How to Play the Stock
Read MoreHide Full Article
Shares of Chubb Limited (CB - Free Report) have gained 7.4% in the past six months, outperforming the S&P 500 composite’s growth of 5.4%. It, however, underperformed the industry’s growth of 10.6% and the Finance sector’s return of 10.3%.
Six Months Price Performance
Image Source: Zacks Investment Research
With a capitalization of $109.53 billion, the average volume of shares traded in the last three months was 1.47 million.
Chubb’s Growth Projection Encourages
The Zacks Consensus Estimate for Chubb’s 2025 earnings per share and revenues indicates an increase of 6.1% and 7.5%, respectively, from the corresponding 2024 estimates.
Earnings have grown 19.4% in the past five years, better than the industry average of 11.4%. The expected long-term earnings growth rate is 2%. CB beat earnings estimates in each of the last four quarters, with an average surprise of 22.19%.
CB’s Return on Capital
Return on equity in the trailing 12 months was 15.5%, better than the industry average of 7.6%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
Also, return on invested capital (ROIC) has been increasing over the last few quarters amid capital investments made over the same time frame. This reflects CB’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 10.1%, better than the industry average of 5.8%.
Key Points to Note for CB
Chubb remains focused on capitalizing on the potential of middle-market businesses (both domestic and international) as well as enhancing traditional core packages and specialty products for long-term growth. The insurer is also making strategic investments in various initiatives that will accelerate growth.
Chubb, one of the world’s largest providers of property and casualty (P&C) insurance, pursues strategic mergers and acquisitions to diversify its portfolio, add capabilities and synergies, and expand its geographic footprint. Acquisitions have also improved premium revenues. Premiums should also benefit from commercial P&C rate increases, new business and strong renewal retention.
Though the Fed has started lowering the interest rate, investment income should benefit from improving operating cash flow.
Chubb has a strong capital position and sufficient cash-generation capabilities, which support wealth distribution to shareholders and growth initiatives.
Being a P&C insurer, CB is exposed to catastrophe events, which induce volatility in underwriting profitability and affect the combined ratio. Given the uncertainty surrounding the magnitude of cat loss, higher losses could drain earnings.
Recently, Chubb estimated losses from Hurricane Milton between $250 million and $300 million pre-tax and $208-$250 million after-tax, net of reinsurance and including reinstatement premiums. These losses will weigh on the profitability of its commercial and personal property and casualty insurance businesses, as well as its reinsurance operations, in the fourth quarter of 2024.
CB Shares are Expensive
CB shares are trading at a price-to-book multiple of 1.56, higher than the industry average of 1.52. However, CB shares are cheaper when compared with other insurers like The Travelers Companies (TRV - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) and The Allstate Corporation (ALL - Free Report) .
Wrapping Up: Keep On Holding
Chubb’s market-leading position, compelling portfolio, strong renewal retention, positive rate increases, solid capital position and better return on capital pave the way for long-term growth.
The insurer’s dividend history is impressive. It has increased dividends for 31 straight years. CB has a dividend yield of 1.3%, better than the industry average of 0.2%.
Image: Bigstock
Chubb Rises 7.4% but Lags Industry: How to Play the Stock
Shares of Chubb Limited (CB - Free Report) have gained 7.4% in the past six months, outperforming the S&P 500 composite’s growth of 5.4%. It, however, underperformed the industry’s growth of 10.6% and the Finance sector’s return of 10.3%.
Six Months Price Performance
Image Source: Zacks Investment Research
With a capitalization of $109.53 billion, the average volume of shares traded in the last three months was 1.47 million.
Chubb’s Growth Projection Encourages
The Zacks Consensus Estimate for Chubb’s 2025 earnings per share and revenues indicates an increase of 6.1% and 7.5%, respectively, from the corresponding 2024 estimates.
Earnings have grown 19.4% in the past five years, better than the industry average of 11.4%. The expected long-term earnings growth rate is 2%. CB beat earnings estimates in each of the last four quarters, with an average surprise of 22.19%.
CB’s Return on Capital
Return on equity in the trailing 12 months was 15.5%, better than the industry average of 7.6%. Return on equity, a profitability measure, reflects how effectively a company is utilizing its shareholders.
Also, return on invested capital (ROIC) has been increasing over the last few quarters amid capital investments made over the same time frame. This reflects CB’s efficiency in utilizing funds to generate income. ROIC in the trailing 12 months was 10.1%, better than the industry average of 5.8%.
Key Points to Note for CB
Chubb remains focused on capitalizing on the potential of middle-market businesses (both domestic and international) as well as enhancing traditional core packages and specialty products for long-term growth. The insurer is also making strategic investments in various initiatives that will accelerate growth.
Chubb, one of the world’s largest providers of property and casualty (P&C) insurance, pursues strategic mergers and acquisitions to diversify its portfolio, add capabilities and synergies, and expand its geographic footprint. Acquisitions have also improved premium revenues. Premiums should also benefit from commercial P&C rate increases, new business and strong renewal retention.
Though the Fed has started lowering the interest rate, investment income should benefit from improving operating cash flow.
Chubb has a strong capital position and sufficient cash-generation capabilities, which support wealth distribution to shareholders and growth initiatives.
Being a P&C insurer, CB is exposed to catastrophe events, which induce volatility in underwriting profitability and affect the combined ratio. Given the uncertainty surrounding the magnitude of cat loss, higher losses could drain earnings.
Recently, Chubb estimated losses from Hurricane Milton between $250 million and $300 million pre-tax and $208-$250 million after-tax, net of reinsurance and including reinstatement premiums. These losses will weigh on the profitability of its commercial and personal property and casualty insurance businesses, as well as its reinsurance operations, in the fourth quarter of 2024.
CB Shares are Expensive
CB shares are trading at a price-to-book multiple of 1.56, higher than the industry average of 1.52. However, CB shares are cheaper when compared with other insurers like The Travelers Companies (TRV - Free Report) , Cincinnati Financial Corporation (CINF - Free Report) and The Allstate Corporation (ALL - Free Report) .
Wrapping Up: Keep On Holding
Chubb’s market-leading position, compelling portfolio, strong renewal retention, positive rate increases, solid capital position and better return on capital pave the way for long-term growth.
The insurer’s dividend history is impressive. It has increased dividends for 31 straight years. CB has a dividend yield of 1.3%, better than the industry average of 0.2%.
However, given its premium valuation and catastrophe loss weighing on its performance, it is preferable to stay cautious on this Zacks Rank #3 (Hold) stock. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.