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Everest Re Group (RE) on Growth Track: Should You Hold?
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Shares of Everest Re Group Ltd. gained 7.81% year to date, significantly outperforming the Zacks categorized Property and Casualty Insurance industry’s growth of 1.72%. Also, the company witnessed full-year 2017 estimates moving north by nearly 1.7% over the last 60 days. We expect the stock to retain its momentum owing to a number of positives.
Everest Re Group’s Insurance segment has been witnessing an improvement in gross written premiums over the past few years. The premium growth has been driven by initiatives like product diversification and expansion of the property insurance geographic footprint. The company is expected to continue benefiting from such developments in the future.
Moreover, Mt. Logan Re – one of the key growth drivers of this Zacks Rank #3 (Hold) property and casualty (P&C) insurer – has displayed significant improvement in Asset Under Management (AUM) and remains the fastest growing capital market vehicle. Increase in AUM will help the company execute and enhance its long-term capital management and business strategy.
In addition, the company has been benefiting from its capital adequacy, financial flexibility, long-term operating performance and traditional risk management capabilities. Given its prudent capital management strategy and robust capital balance position, Everest Re Group is anticipated to continue engaging in dividend payouts and share buybacks.
Currently, Everest Re Group’s stock seems to be undervalued. This is because the stock is trading at 1.18x price to book multiple over a period of one year, which compares favorably with the P&C industry’s multiple of 1.44x.
Interestingly, the company’s price-to-earnings growth ratio – which determines the relative trade-off among the price of a stock, earnings generated per share and the company's expected growth – is 1.22. This is better than the industry average of 1.86. Furthermore, the company’s expected long-term earnings growth is pegged at 10.00%.
Headwinds
However, exposure to catastrophe losses remains a concern for the company as this lends volatility to earnings. Moreover, the company’s underwriting results continue to be negatively impacted by such losses.
Earnings Whispers
Everest Re Group is slated to report first-quarter 2017 results on Apr 24. The Zacks Consensus Estimate for the same is currently pegged at $5.26 per share, which translates into a year-over-year increase of 1.27%. Also, a Zacks Rank #3 combined with an Earnings ESP of +2.47% makes us reasonably confident of an earnings beat.
Stocks to Consider
Some better-ranked stocks from the same space include Argo Group International Holdings, Ltd. , Infinity Property and Casualty Corporation and The Progressive Corporation (PGR - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Argo Group International Holdings underwrites specialty insurance and reinsurance products in the P&C market worldwide. The company delivered positive surprises in all of the last four quarters with an average beat of 36.54%.
Infinity Property and Casualty provides personal automobile insurance products in the United States. The company delivered positive surprises in two of the last four quarters with an average beat of 26.16%. The company sports a Zacks Rank #1.
The Progressive Corporation offers personal and commercial P&C insurance, and other specialty P&C insurance and related services primarily in the United States. The company delivered a positive surprise in two of the last four quarters with an average beat of 1.32%.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>
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Everest Re Group (RE) on Growth Track: Should You Hold?
Shares of Everest Re Group Ltd. gained 7.81% year to date, significantly outperforming the Zacks categorized Property and Casualty Insurance industry’s growth of 1.72%. Also, the company witnessed full-year 2017 estimates moving north by nearly 1.7% over the last 60 days. We expect the stock to retain its momentum owing to a number of positives.
Everest Re Group’s Insurance segment has been witnessing an improvement in gross written premiums over the past few years. The premium growth has been driven by initiatives like product diversification and expansion of the property insurance geographic footprint. The company is expected to continue benefiting from such developments in the future.
Moreover, Mt. Logan Re – one of the key growth drivers of this Zacks Rank #3 (Hold) property and casualty (P&C) insurer – has displayed significant improvement in Asset Under Management (AUM) and remains the fastest growing capital market vehicle. Increase in AUM will help the company execute and enhance its long-term capital management and business strategy.
In addition, the company has been benefiting from its capital adequacy, financial flexibility, long-term operating performance and traditional risk management capabilities. Given its prudent capital management strategy and robust capital balance position, Everest Re Group is anticipated to continue engaging in dividend payouts and share buybacks.
Currently, Everest Re Group’s stock seems to be undervalued. This is because the stock is trading at 1.18x price to book multiple over a period of one year, which compares favorably with the P&C industry’s multiple of 1.44x.
Interestingly, the company’s price-to-earnings growth ratio – which determines the relative trade-off among the price of a stock, earnings generated per share and the company's expected growth – is 1.22. This is better than the industry average of 1.86. Furthermore, the company’s expected long-term earnings growth is pegged at 10.00%.
Headwinds
However, exposure to catastrophe losses remains a concern for the company as this lends volatility to earnings. Moreover, the company’s underwriting results continue to be negatively impacted by such losses.
Earnings Whispers
Everest Re Group is slated to report first-quarter 2017 results on Apr 24. The Zacks Consensus Estimate for the same is currently pegged at $5.26 per share, which translates into a year-over-year increase of 1.27%. Also, a Zacks Rank #3 combined with an Earnings ESP of +2.47% makes us reasonably confident of an earnings beat.
Stocks to Consider
Some better-ranked stocks from the same space include Argo Group International Holdings, Ltd. , Infinity Property and Casualty Corporation and The Progressive Corporation (PGR - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
Argo Group International Holdings underwrites specialty insurance and reinsurance products in the P&C market worldwide. The company delivered positive surprises in all of the last four quarters with an average beat of 36.54%.
Infinity Property and Casualty provides personal automobile insurance products in the United States. The company delivered positive surprises in two of the last four quarters with an average beat of 26.16%. The company sports a Zacks Rank #1.
The Progressive Corporation offers personal and commercial P&C insurance, and other specialty P&C insurance and related services primarily in the United States. The company delivered a positive surprise in two of the last four quarters with an average beat of 1.32%.
The Best & Worst of Zacks
Today you are invited to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buys" free of charge. From 1988 through 2015 this list has averaged a stellar gain of +25% per year. Plus, you may download 220 Zacks Rank #5 "Strong Sells." Even though this list holds many stocks that seem to be solid, it has historically performed 6X worse than the market. See these critical buys and sells free >>