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Why Is Axis Capital (AXS) Down 3.6% Since the Last Earnings Report?
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It has been about a month since the last earnings report for Axis Capital Holdings Limited (AXS - Free Report) . Shares have lost about 3.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
AXIS Capital Q1 Earnings & Revenues Miss Estimates
AXIS Capital reported first-quarter 2017 earnings of $0.59 per share that missed the Zacks Consensus Estimate by 27%. Also, earnings declined 45% from the year-ago quarter.
The company had to bear the impact of the Ogden rate change in the U.K., executive severance and retirement costs, and an impairment of an equity-method investment alongside high catastrophe and weather-related losses in the quarter.
AXIS Capital’s net income plummeted 85% year over year to $0.06 per share.
Operational Update
Operating revenues of about $1.04 billion lagged the Zacks Consensus Estimate of $1.07 billion. However, revenues increased 15% year over year.
Gross premiums written declined 2% year over year to approximately $1.9 billion due to 7% lower premiums written in reinsurance segment. However, a 4% increase in premiums written in Insurance segment limited the downside.
Net investment income more than doubled to $98.7 million.
Total expense in the quarter increased 17% year over year to $992.3 million.
AXIS Capital’s underwriting income plunged 83% year over year to $16.4 million. Combined ratio deteriorated 1020 basis points (bps) to 102.1%. Catastrophe and weather-related pre-tax net losses widened to $35 million from $14 million in the year-ago quarter.
Segment Result
Insurance Segment: Gross premiums written increased 6% year over year owing to new business in accident, and health & professional lines.
Net premiums earned increased 5% year over year on premium growth in accident and health lines, as well as property lines.
Underwriting income of $6 million declined 23% from the year-ago quarter. Combined ratio deteriorated 110 bps to 97.2%.
Reinsurance Segment: Gross premiums written in the quarter decreased 7% year over year to $1.2 billion, largely due to a lower level of premiums written on a multi-year basis.
Net premiums earned improved 4% year over year on premium growth in agriculture, liability, motor, and catastrophe lines.
Underwriting income of $3 million declined from $82 million in the year-ago quarter. Combined ratio deteriorated 1620 bps year over year to 98.5%.
Financial Update
AXIS Capital exited the quarter with cash and cash equivalents of $1.2 billion, up 12% from the 2016-end level.
Cash used in operation was $36 million as against $14 million used in the year-ago quarter.
As of Mar 31, 2017, diluted book value per share was $58.89, up 5% year over year.
Operating return on equity was 4% compared with 7.7% in year-ago quarter.
Share Repurchase and Dividend Update
The company repurchased 2.2 million shares for $151 million shares. AXIS Capital has $836 million remaining authorization under the common shares’ repurchase program up to Dec 2017.
The company declared a dividend of 38 cents per common share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two downward revisions for the current quarter. In the past month, the consensus estimate also shifted downward by 9.6% due to these changes.
At this time, Axis Capital's stock has a poor Growth Score of 'F', however its Momentum is doing a lot better with a 'C'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable solely for momentum investors based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.
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Why Is Axis Capital (AXS) Down 3.6% Since the Last Earnings Report?
It has been about a month since the last earnings report for Axis Capital Holdings Limited (AXS - Free Report) . Shares have lost about 3.6% in that time frame, underperforming the market.
Will the recent negative trend continue leading up to the stock’s next earnings release, or is it due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
AXIS Capital Q1 Earnings & Revenues Miss Estimates
AXIS Capital reported first-quarter 2017 earnings of $0.59 per share that missed the Zacks Consensus Estimate by 27%. Also, earnings declined 45% from the year-ago quarter.
The company had to bear the impact of the Ogden rate change in the U.K., executive severance and retirement costs, and an impairment of an equity-method investment alongside high catastrophe and weather-related losses in the quarter.
AXIS Capital’s net income plummeted 85% year over year to $0.06 per share.
Operational Update
Operating revenues of about $1.04 billion lagged the Zacks Consensus Estimate of $1.07 billion. However, revenues increased 15% year over year.
Gross premiums written declined 2% year over year to approximately $1.9 billion due to 7% lower premiums written in reinsurance segment. However, a 4% increase in premiums written in Insurance segment limited the downside.
Net investment income more than doubled to $98.7 million.
Total expense in the quarter increased 17% year over year to $992.3 million.
AXIS Capital’s underwriting income plunged 83% year over year to $16.4 million. Combined ratio deteriorated 1020 basis points (bps) to 102.1%. Catastrophe and weather-related pre-tax net losses widened to $35 million from $14 million in the year-ago quarter.
Segment Result
Insurance Segment: Gross premiums written increased 6% year over year owing to new business in accident, and health & professional lines.
Net premiums earned increased 5% year over year on premium growth in accident and health lines, as well as property lines.
Underwriting income of $6 million declined 23% from the year-ago quarter. Combined ratio deteriorated 110 bps to 97.2%.
Reinsurance Segment: Gross premiums written in the quarter decreased 7% year over year to $1.2 billion, largely due to a lower level of premiums written on a multi-year basis.
Net premiums earned improved 4% year over year on premium growth in agriculture, liability, motor, and catastrophe lines.
Underwriting income of $3 million declined from $82 million in the year-ago quarter. Combined ratio deteriorated 1620 bps year over year to 98.5%.
Financial Update
AXIS Capital exited the quarter with cash and cash equivalents of $1.2 billion, up 12% from the 2016-end level.
Cash used in operation was $36 million as against $14 million used in the year-ago quarter.
As of Mar 31, 2017, diluted book value per share was $58.89, up 5% year over year.
Operating return on equity was 4% compared with 7.7% in year-ago quarter.
Share Repurchase and Dividend Update
The company repurchased 2.2 million shares for $151 million shares. AXIS Capital has $836 million remaining authorization under the common shares’ repurchase program up to Dec 2017.
The company declared a dividend of 38 cents per common share.
How Have Estimates Been Moving Since Then?
Following the release, investors have witnessed a downward trend in fresh estimates. There have been two downward revisions for the current quarter. In the past month, the consensus estimate also shifted downward by 9.6% due to these changes.
Axis Capital Holdings Limited Price and Consensus
Axis Capital Holdings Limited Price and Consensus | Axis Capital Holdings Limited Quote
VGM Scores
At this time, Axis Capital's stock has a poor Growth Score of 'F', however its Momentum is doing a lot better with a 'C'. Charting a somewhat similar path, the stock was allocated a grade of 'D' on the value side, putting it in the bottom 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of 'F'. If you aren't focused on one strategy, this score is the one you should be interested in.
The stock is suitable solely for momentum investors based on our styles scores.
Outlook
Estimates have been broadly trending downward for the stock. The magnitude of these revisions also indicates a downward shift. It's no surprise that the stock has a Zacks Rank #5 (Strong Sell). We are expecting a below average return from the stock in the next few months.